diff --git a/erpnext/controllers/tests/test_distributed_discount.py b/erpnext/controllers/tests/test_distributed_discount.py
new file mode 100644
index 00000000000..e4dbdbb1480
--- /dev/null
+++ b/erpnext/controllers/tests/test_distributed_discount.py
@@ -0,0 +1,61 @@
+from frappe.tests.utils import FrappeTestCase
+
+from erpnext.accounts.test.accounts_mixin import AccountsTestMixin
+from erpnext.controllers.taxes_and_totals import calculate_taxes_and_totals
+from erpnext.selling.doctype.sales_order.test_sales_order import make_sales_order
+
+
+class TestTaxesAndTotals(AccountsTestMixin, FrappeTestCase):
+	def test_distributed_discount_amount(self):
+		so = make_sales_order(do_not_save=1)
+		so.apply_discount_on = "Net Total"
+		so.discount_amount = 100
+		so.items[0].qty = 5
+		so.items[0].rate = 100
+		so.append("items", so.items[0].as_dict())
+		so.items[1].qty = 5
+		so.items[1].rate = 200
+		so.save()
+
+		calculate_taxes_and_totals(so)
+
+		self.assertAlmostEqual(so.items[0].distributed_discount_amount, 33.33, places=2)
+		self.assertAlmostEqual(so.items[1].distributed_discount_amount, 66.67, places=2)
+		self.assertAlmostEqual(so.items[0].net_amount, 466.67, places=2)
+		self.assertAlmostEqual(so.items[1].net_amount, 933.33, places=2)
+		self.assertEqual(so.total, 1500)
+		self.assertEqual(so.net_total, 1400)
+		self.assertEqual(so.grand_total, 1400)
+
+	def test_distributed_discount_amount_with_taxes(self):
+		so = make_sales_order(do_not_save=1)
+		so.apply_discount_on = "Grand Total"
+		so.discount_amount = 100
+		so.items[0].qty = 5
+		so.items[0].rate = 100
+		so.append("items", so.items[0].as_dict())
+		so.items[1].qty = 5
+		so.items[1].rate = 200
+		so.append(
+			"taxes",
+			{
+				"charge_type": "On Net Total",
+				"account_head": "_Test Account VAT - _TC",
+				"cost_center": "_Test Cost Center - _TC",
+				"description": "VAT",
+				"included_in_print_rate": True,
+				"rate": 10,
+			},
+		)
+		so.save()
+
+		calculate_taxes_and_totals(so)
+
+		# like in test_distributed_discount_amount, but reduced by the included tax
+		self.assertAlmostEqual(so.items[0].distributed_discount_amount, 33.33 / 1.1, places=2)
+		self.assertAlmostEqual(so.items[1].distributed_discount_amount, 66.67 / 1.1, places=2)
+		self.assertAlmostEqual(so.items[0].net_amount, 466.67 / 1.1, places=2)
+		self.assertAlmostEqual(so.items[1].net_amount, 933.33 / 1.1, places=2)
+		self.assertEqual(so.total, 1500)
+		self.assertAlmostEqual(so.net_total, 1272.73, places=2)
+		self.assertEqual(so.grand_total, 1400)