Discussion:Simple Trust Tax Return

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Discussion Forum Index --> Advanced Tax Questions --> Simple Trust Tax Return
Discussion Forum Index --> Tax Questions --> Simple Trust Tax Return

Www.cpa1.biz (talk|edits) said:

9 March 2009
Almanacers,

I am going to try to prepare my first trust tax return. My tax client has informed me her mother has set up a trust and she is one of the three beneficiaries and they would like me to prepare it. I may have to partner with another preparer to get this done.

I have reviewed the income from the trust and it is dividend and interest income.

Here are my questions:

1) I know if this is a simple trust return that all income should be distributed to the beneficiaries and shown on the K-1. Does the money actually have to be distributed or can it still stay in the trust bank or brokerage account.

2) Do I have to find out from the lawyer what type of trust it is or by the transactions that happened during the year derive what type of return it is.

3) If it is a simple trust return, are there any things I should be aware of during the preparation.

Please advise.

Thanks,

Bj

Kevinh5 (talk|edits) said:

9 March 2009
you need to

1) take a basic trust tax prep class

2) read the document

3) the answers to your question will easily follow

a) no

b) your education and reading of the trust will tell you

c) that's what the class is for

Edcosoft (talk|edits) said:

9 March 2009
I second Kevin, but we could offer some help to get you off the hook. Is mother still alive? Are the income and dividends 1009 to mother's SS# or a trust ID#? If she's still alive and payers are using her SS#, it is probably a living/grantor trust and should be ignored until she dies, paarticularly if the trust says "in the event Mrs xxx dies, the trustee shall...". See Instructions for form 1041.

ed

Blrgcpa (talk|edits) said:

9 March 2009
READ THE TRUST DOCUMENT before you start!

If as suggested above that it may be revocable trust, mom's ssn, it's mom's income.

If it's a simple irrevocable trust, then the income is required to be distributed to the benes and reported on the K-1.

Ddaallas (talk|edits) said:

10 March 2009
LOL! I think the lesson is there's no such thing as a "simple" trust, IRS vernacular notwithstanding.

Riley2 (talk|edits) said:

10 March 2009
By all means, contact the attorney. There is really no reason to spend hours of time reviewing the trust instrument if the attoney can direct you to trust language which indicates that this is a grantor trust for which there are no filing requirements.

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