Generally speaking.......how is an irrevocable trust taxed? Or is it very complex? Thank you,
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Tax Professional Answers
Gerald Nordland
The taxation is determined by the TYPE of Trust (Simple or Complex) rather than whether it can be changed (Revocable) or not (Irrevocable). A Simple trust distributes ALL income to the beneficiaries who pay tax on their share, and does not distribute Trust principle during the year.
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446 weeks ago
Robert Ferguson
The assets of a trust (revocable or irrevocable) are reported to the trust using K1's or 1099's. The trust then files IRS form 1041 which reports the information to the IRS and to the Beneficiaries who in turn file the income received from the trust. Often in a complex situation there is a holding company between the assets and the Trust to have a professional manager involved with the assets to monitor and add a level of control to all. Those are steppes in the process of filing. Some trusts may be complex and some may be simple, but the process remains the same.The number of assets held and what is reported to the trust determines the complexity of each trust.
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446 weeks ago