[Federal 1041] If a simple trust is required to distribute all income, there should be no taxable income. It does not mean that the resolution should appoint “taxable income” amongst the beneficiaries, it should still appoint “trust income” that just so happens to equate to taxable income.

... A simple trust will be complex in its final year since any corpus remaining in the trust will be distributed in the trust's final year. If you are the trustee of a trust from which you made distributions of income to beneficiaries, you must issue a Beneficiary's Share of Income, Deductions, Credits, etc. So if it is a simple trust, and all has been done as required, the amount on the 1040 Schedule E that is taxed is also the amount distributed. Trusts are treated as separate taxable entities, so they must file tax returns and pay income tax on their income. A trustee may be able to reduce income taxes by making a distribution of income from a trust to beneficiaries by March 6, 2017. The trust must distribute some funds to charitable organizations. While the same holds true after the enactment of the Tax Cuts and Jobs Act (TCJA), the income tax landscape has shifted due to the various changes under the TCJA. The trust does not distribute amounts allocated to the corpus of the trust. The trust must retain some of its income and not distribute all of it to beneficiaries. It is likely that the trust itself requires accountings, but even if it is a poorly drawn document that does not contain such requirements, I am confident Indiana law does. The exact length of this period appears in the trust document, but it is usually 30 days. Presumably the trustee is represented by an attorney. You must file a tax return in the same manner as an individual, as the simple trust is a taxpayer. If the trust is not a simple trust (and not a grantor trust) and distributions are not made, all of the income gets taxed to the trust. Prior to tax reform, the rules governing the income taxation of trusts and estates were considered complex and intimidating by many. 1.651(a)-1). Simple Trusts will not compute Trust Accounting Income (Schedule B, line 8). The trustee cannot distribute any assets or income from the trust until the survivorship period passes.

A complex trust is essentially the opposite of a simple trust. As such, all trust income has been offset by trust expenses (deductions) and principal is all that remains to be distributed. The trust income is therefore taxed at the grantor level.

The trust must pay taxes on any interest income it holds and does not distribute past year-end. Yes.

The trustee can still only distribute trust law income – it is just that trust law income now equals the same thing as the Tax Act defines as assessable net income.

Simple trusts are not required to consider actual distributions when determining the trust’s Income Distribution Deduction, as all accounting income is required to be distributed. Sec.

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