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Paul Taliefero
Paul Taliefero, Enrolled Agent
Category: Tax
Satisfied Customers: 239
Experience:  19 years of experience in income taxes
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If a personal residence is in a simple trust. The mortgage

Resolved Question:

If a personal residence is in a simple trust. The mortgage interest is being deducted by the beneficiary, do the payments made to the mortgage company from the trust get treated as distributed to the beneficiary? If not how should it be reflected on the 1041?
Submitted: 8 years ago.
Category: Tax
Expert:  Paul Taliefero replied 8 years ago.

If it would have been the beneficiary's principal residence (but for being owned by the trust) then it is deductible by the trust.

This interest is deducted on Form 1041, Line 10.

If the beneficiary is deducting the interest (which is allowable), then that is reflected on Schedule K-1.

Customer: replied 8 years ago.
<p>That does not answer my question. It is not a personal residence trust, and no the mortgage interest of the beneficiary is not deductible on the 1041 because the debt is not held by the trust.</p><p> </p><p>However my question was how to treat the <strong>payments to the mortgage company</strong>. Are <strong>those payments distributions to the beneficiary? </strong></p>
Expert:  Paul Taliefero replied 8 years ago.

If the trust is making a mortgage payment for a beneficiary, and the trust is not obligated to make that payment, then it is definitely a distribution to the beneficiary.

 

Report it as such on the 1041, and on the K-1.

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