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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
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Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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What are the reporting requirements by corporations that

Customer Question

What are the reporting requirements by corporations that manage Trust accounts. I have been told that 1099's do not exist. I need third-party reporting documentation to sign off on a court ordered Estate/Trust Interim Accounting. I am a Co-Executor/ Co-Trustee with a Wealth Management corporation. They have refused to release third-party reporting documentation or a annual tax letter. What are the reporting documentations, and what is a Tax letter. What does the IRS require in a Tax letter.
Submitted: 10 months ago.
Category: Finance
Expert:  Jonathan Tierney replied 10 months ago.

Hi, my name is ***** ***** I can help. Trust are required to provide their beneficiaries with a Schedule K-1 showing them the amount of income they are required to their personal tax return. A "tax letter" probably refers to a statement from a bank reporting the activity in a grantor trust. A grantor trust is revocable by the grantor of the trust and for federal income tax purposes does not need to file its own tax return as the grantor of the trust reports all the activity on his or her own return. A "tax letter" would be a statement from the bank that manages the trust of the activity that need's to be reported on the grantor's tax return.

Why isn't the wealth management corp preparing the trust accounting? Do they dispute your status as trustee or otherwise dispute that you have a right to the information under the trust instrument?

Customer: replied 9 months ago.
The Trust is irrevocable, so your answer does not help. I did receive K-1's, however, my question concerned third-party reporting documentation. What other third-party reporting documentation exists for Municipal Bond securities in a Irrevocable trust so that I can reconcile the 1041's with the Interim Accounting for the Trust. they do not match.what other
Expert:  Jonathan Tierney replied 9 months ago.

The probate accounting is likely prepared on a completely cash basis, whereas the 1099s do have some accrual. One example would be if a company or mutual fund declares a dividend to be paid after the year-end, though the taxpayer is already entitled to the dividend before year-end, the 1099 would include the dividend in the earlier year, whereas the interim accounting might include the dividend income in the later year when the cash is received. However, without actually looking at the documents I cannot really tell for sure. If you can upload a redacted copy I can take a look at the documents themselves to see if I can find what the differences are. You can upload the files to a Dropbox folder to other people on the site do not have access to them. I will post a service offer for this additional service.

Expert:  Jonathan Tierney replied 9 months ago.

The probate accounting standards would be based upon the Principal and Income Act of your state, which you can read more about here: http://www.leimberg.com/freeresources/truarticles/primeronuniformprincipal.html as well as the document attached below.

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