Have a Tax Question? Ask a Tax Expert
Hi, my name is ***** ***** I can help. Your mother's trust and/or estate would need to file a Form 1041 to report its income. However, if the income was distributed to her beneficiaries' the trust and/or estate can take a deduction for amounts it distributes and issues a K-1 to its beneficiaries who then report it on their personal income tax returns.
Was you mother's trust a revocable one? If yes, the trustee can elect to treat her revocable trust and estate as a single entity. This would be beneficial as the trust would then be able to elect a fiscal year ending May 31, so any K-1's issued would go on the beneficiaries' 2016 tax returns which would be filed in 2017.
Income from an annuity is taxable as ordinary income.
Do you need help preparing the Form 1041?
I hope this answers your question. Please let me know if I can clarify anything or answer any additional questions.