Beachkids5
Level 3
‎06-25-2024 02:06 PM

Am doing a 1041 for simple trust with 1 beneficiary.  Generates tax of $1000+.  Income also goes to K-1 creating tax.  Without overriding the qualified dividends to trust instead of beneficiary is there something I'm missing to keep from double tax.

Thank you.

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IRonMaN
Level 15
‎06-25-2024 02:19 PM

There is no double taxation.  The trust is supposed to distribute all of the income so the beneficiary pays the tax.


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Accountant-Man
Level 13
‎06-25-2024 06:49 PM

"Simple" trusts generally require distribution of all "income," which means interest, dividends, rental income, etc. less expenses, but does NOT include capital gains, which are corpus not income.

Therefore, the typical simple trust shows interest and dividends on the K-1 to the beneficiary and the CGs are taxed to the trust.

This is not double taxation.

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