Bry
Level 3
02-17-2021
07:53 PM
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Can the Income Distribution Deduction for a Trust be $0, even if distributions are made? Client would like all income taxable to the trust rather than taxable to the beneficiaries. IRC 661 (below) says the income distribution deduction is "allowed," but I don't see anywhere that says it is required. Form 1041 Schedule B seems to force you to take the deduction.
Internal Revenue Code, § 661. Deduction For Estates And Trusts Accumulating Income Or Distributing Corpus
661(a)
Deduction —
Deduction —
In any taxable year there shall be allowed as a deduction in computing the taxable income of an estate or trust (other than a trust to which subpart B applies), the sum of—
661(a)(1)
— any amount of income for such taxable year required to be distributed currently (including any amount required to be distributed which may be paid out of income or corpus to the extent such amount is paid out of income for such taxable year); and
— any amount of income for such taxable year required to be distributed currently (including any amount required to be distributed which may be paid out of income or corpus to the extent such amount is paid out of income for such taxable year); and
661(a)(2)
— any other amounts properly paid or credited or required to be distributed for such taxable year; but such deduction shall not exceed the distributable net income of the estate or trust.
— any other amounts properly paid or credited or required to be distributed for such taxable year; but such deduction shall not exceed the distributable net income of the estate or trust.
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