Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-09-2015, 04:50 PM
Member
 
Join Date: Jan 2014
Posts: 35
Decuctions on the 1041

Can a trust take an income distribution deduction and also a deduction for taxes paid on form 1041 when the trust uses trust income to pay real estate taxes on behalf of a beneficiary that lives in the trust owned home? The trust would issue a K-1 to the beneficiary for the tax payment that was made on behalf of that beneficiary.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 01-10-2015, 12:17 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,207
a trust take an income distribution deduction and also a deduction for taxes paid on form 1041 when the trust uses trust income to pay real estate taxes on behalf of a beneficiary that lives in the trust owned home?======it depends aslongas it ie revocable grantor trust then yes if not no; if it is an irrevocable trust than the trust cannot take the deduction for property taxes.




The trust would issue a K-1 to the beneficiary for the tax payment that was made on behalf of that beneficiary.=====>>>>>>>>as mentioned above,
an irrevocable trust can pass property taxes to the grantor/beneficiaries for the deduction on their personal tax return. A trust can generate income that must be reported on Form 1041.However, if trust beneficiaries are entitled to receive the income, the beneficiaries must pay the income tax rather than the trust. For trusts that pay a distribution of earnings to beneficiaries, no tax is due on those distributions. Instead, the income is passed through to the beneficiaries, who report the distribution as income on their personal tax returns. The trust issues Sch K-1 to each beneficiary to use in preparing his return. Such tax treatment of estates and trusts is why they are called “pass-through” entities.

At the end of the year, all income distributions made to beneficiaries must be reported on a Sch K-1 of 1041. Since the trust must report all income, deductions are available for amounts that must be distributed to beneficiaries. Form 1041 allows for an “income distribution deduction” that includes the total income reported on all beneficiary K-1s. You must prepare a Sch B attachment for Form 1041 to take the deduction.
If the income distribution is discretionary, meaning the trustee or estate administrator has authority to decide whether beneficiaries will receive distributions, the payments aren’t deductible on 1041 and are not reported on Sch K-1. The trust is responsible for paying the income tax on these distributions, not the beneficiaries.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
1041 Schedule B - Corpus Music78 Trusts and Gift Tax Returns 0 03-29-2012 09:16 PM
Do I need to file 1041-T form? Saver4 Trusts and Gift Tax Returns 1 02-14-2012 04:02 AM
1041 Capital Gain timber Estate Planning 0 03-22-2010 06:30 PM
Interest and Dividends on 1041 ribbydibs Trusts and Gift Tax Returns 0 04-09-2009 09:15 AM
Schedule K-1 (Form 1041) BTOG Income 1 03-25-2009 02:09 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning