K-1 simple trust with no beneficiaries?

[Greta]

New client brought 2021 simple Trust 1041 with no beneficiaries, trust paid all the tax. How do I indicate that there are no beneficiaries in ProSeries?

[IRonMaN]

Are you saying "simple trust" as in easy to do or simple trust as in a simple vs complex trust?  Simple trusts are required to distribute their earnings.  Are you sure there aren't any beneficiaries?  What would be the purpose of a trust if nobody or nothing ultimately benefits from it?

[sjrcpa]

Or maybe there was no distributable income.

I'll do zero K-1s in this situation, but not everyone does.

Of course you have the trust document so you know who the beneficiaries are and what the terms are. 😉

[Greta]

Last year's tax preparer checked the Simple Trust box and took $300 deduction. He reported zero beneficiaries. (ProSeries won't let you check that box and have no beneficiaries.) Trust has income from renting out a farm. I have asked to see the trust document; client said there are three beneficiaries. So it was incorrectly done last year. 2022 was extended, and I'm to do it now.  All three beneficiaries have already filed individual returns.

[BobKamman]

Were distributions made to the beneficiaries?  All three may have to file amended returns.  The trustee could offer to pay the cost of that.  

[qbteachmt]

"and took $300 deduction"

Didn't everyone? Ha ha ha...

"The trustee could offer to pay the cost of that."

Or the prior preparer...

[sjrcpa]

With a simple trust, the beneficiaries are taxed on the distributable income whether or not they receive it.

@Greta  - are you sure there was distributable income?  And until you get the trust doc, you don't know if it actually is a simple trust.

[Accountant-Man]

OP said the trust "paid all the tax," but was it ordinary income or capital gains? Gains are not typically distributed.

[Greta]

Every year the trust earns net farm rental income of about 30K. Last year it paid all taxes on it. It checked the box for simple trust with zero beneficiaries. I've asked client to see what the trust document actually says.

[BobKamman]

Just another case of "I don't like the parts of the Internal Revenue Code that Congress and the President enacted, so I'm going to follow my own private tax law that allows the trust to pay tax rather than the beneficiaries."

"Even if the trust is probably in a higher tax bracket."  

"Because I didn't get this return done in time to send out the K-1s before they filed."

Happens quite frequently.