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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29535
Experience:  Taxes, Immigration, Labor Relations
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I am preparing a 1041 for a Trust with net capital gains of

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I am preparing a 1041 for a Trust with net capital gains of $629.00. My tax program is not computing a tax on this. Why?

LEV :

Hi and welcome to Just Answer!

LEV :

Is that long term capital gains?

Customer:

Yes, it is long term gain.

LEV :

See the workwheet on the page 9 - http://www.irs.gov/pub/irs-pdf/i1041sd.pdf

LEV :

If you are using any tax preparation software - you should be able to locate that worksheet.

LEV :

As long as total income is below $2300 - the marginal tax bracket for the trust is 15% - and long term capital gain are taxable at zero percent tax rate.


That worksheet provides you how calculations are done.

Customer:

I did prepare the worksheet. I just wanted to be sure the tax rate was -0-. This is my first year preparing 1041's for trusts, and I cannot find any reference to the capital gains tax rate being -0- for trusts and estates.

LEV :

Please see for reference - http://www.journalofaccountancy.com/Issues/2010/Oct/20102933.htm


Taxable income and tax liability. The tax calculation for estates and trusts with regard to long-term capital gains rates is the same as for individuals. Thus, just as for individuals, long-term capital gains and qualified dividends are currently taxed at 15% and, for trusts and estates in the 15% tax bracket (the lowest), zero. For trusts and estates, however, that bracket is available only if ordinary income is not more than $2,300.

LEV :

Let me know if you need any help or clarification.

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