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Beachkids5
Level 3
Jun 25, 2024 7:06 PM UTC
Question

1041 simple trust

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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2 replies

IRonMaN
IRonMaN
Level 15
Jun 25, 2024 7:19 PM UTC

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

Slava Ukraini!
    Accountant-Man
    Accountant-Man
    Level 13
    Jun 25, 2024 11:49 PM UTC

    "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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