Trust Return Question

Forum|Forum|4 years ago
March 5, 2022
1 reply
9 views

I am preparing a trust tax return where there are 3 beneficiaries. They are supposed to receive one-third each. However, in 2021, the trust had income of $10,000 and the beneficiaries didn't exactly take their equal shares. There is still some money in the trust in 2022, so I need to also file a Form 1041 in 2022. So here's how the distributions were made in 2021:

Beneficiary # 1 took 24%

Beneficiary # 2 took 38%

Beneficiary # 1 took 38%

When I prepare the Form 1041, do I allocate one-third to each regardless of how much they took as a distribution?

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Best answer by IRonMaN

I would report what they actually received. But out of my abundance of curiosity, why didn't they receive 1/3 each?

IRonMaNAnswer

Level 15

I would report what they actually received. But out of my abundance of curiosity, why didn't they receive 1/3 each?

Slava Ukraini!

E

Ephesians3-14Author

Level 7

One didn't need the money (left it invested in IMB stock) and will sell the stock in 2022, then take the rest of their share. Probably a million reasons why these situations could come up. I just wasn't sure if I had to allocate the income based on the percentages that were taken.

qbteachmt

Level 15

"One didn't need the money (left it invested in IMB stock)"

No; left it in the Trust. Not the same concept.

Are you familiar with "push vs pull?"

"and will sell the stock in 2022"

Do they understand how a trust works? It's not a personal investment account. The Trust distributes. The Beneficiaries don't "take." Now you have another uneven year. There should be a trustee managing this.

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