|
Posted by cballard@tyyni.net on November 7, 2007, 3:46 pm
Please log in for more thread options
> I'm confused. Most are saying no need to file a return for
> the revocable trust (which is equivalent to a grantor
> trust), and in fact, one should not. I still don't
> understand what Ben's statement about "the filing
> requirement depends on income". Is there a situation where
> these trusts do have to file a return? Remember, I only
> know enough to be dangerous :}
The regulations provide for a couple of different ways to
report things in the case of a grantor trust.
1. The default way. Income is reported to the trustee
using the trust's EIN. The trustee files a 1041 and checks
the "grantor trust" box on page 1. The trustee must leave
the rest of the 1041 blank. Instead, the trustee attaches a
statement (not a K-1) to the 1041 explaining all of the
income of the trust and the identity of the grantor. The
1041 return and the statement are filed with the IRS and the
statement must also be provided to the grantor, who then
reports the income on the grantor's 1040.
2. Opional Method #1. Income is reported to the trustee
using the grantor's social security number. The trustee
provides the grantor with a statement of all of the income
reported to the trustee, and the grantor reports this income
on the grantor's 1040. No 1041 is filed. This is by far the
most common way to handle things.
3. Optional Method #2. Income is reported to the trustee
using the trust's EIN. The trustee files a 1099 with the
IRS indicating that the income should be reported on the
grantor's tax return. The trustee provides the grantor with
a statement of all of the income reported to the trustee,
and the grantor reports this income on the grantor's 1040.
No 1041 is filed. I have never seen this method used in
real life.
There's another method that can be used if there are two or
more grantors and if the grantors are not married. I've
never seen that method used, either.
--Chris
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap