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Posted by Stuart A. Bronstein on November 6, 2007, 3:34 pm
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>>> When one establishes a Revocable Trust to shield assets from
>>> probate, what ramifications, if any, are there for tax
>>> preparation? Does a tax return of any kind have to be filed
>>> for the trust? Would I still file a 1040?
>> The filing requirement for the 1041 are independent of the
>> filing requirements for the 1040.
>> Each stands on its own.
>> Generally, the filing requirement depends on income.
>> Remember to also check the state filing requirements for the
>> individual and trust tax returns.
>> Each state has its own rules.
> This answer is incorrect for revocable trusts (Living
> Trust). Such a trust is an ignored entity for income tax.
I wouldn't call it incorrect. He says the filing
requirement depends on income. In the case of a grantor
trust, the trustor is taxable on all trust income, so the
trust itself as no taxable income. As a result, there is no
need to file a return for the revocable trust.
Stu
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