I have a standard family discretionary trust that has a capital gain to which teh 50% general and 50% small business discount applies which because of the age of the beneficiaries will reduce the taxable component to zero. Other then the capital gain, the trust has an operating loss which is less then the grossed up capital gain i.e. there is a overall net profit in the trust. Questions are: 1. Can the operating loss be distributed to an individual? (I think yes as there is net income in the trust) 2. What is the net affect in the individual tax return? i.e. does the grossed up capital gain get offset against the operating loss before the appication of the CGT discounts, effectively wiping out any tax benefit of the trust losses?