A trust receipt or expense shall be allocated to income or principal or partly to each:
(1) In accordance with the terms of the trust instrument, including any provision giving the trustee discretion, notwithstanding contrary provisions of this Subpart.
(2) In accordance with the provisions of this Subpart, in the absence of contrary provisions of the trust instrument.
(3) If no rule is provided in the trust instrument or this Subpart, in accordance with what is reasonable and equitable in view of the interests of those entitled to income as well as of those entitled to principal.