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deceased individual has a trust. deceased had an annuity that

trust is the beneficiary. Year...
deceased individual has a trust. deceased had an annuity that trust is the beneficiary. Year of distribution does the trust pay the tax on the taxable portion of the annuity or the other beneficiary share the tax due. One of the other beneficiary is a nonprofit. There is no direction in the trust document to who gets certain portion of the estate.
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8/21/2013
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
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Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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taxmanrog :

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taxmanrog :

The trust document is silent as to how the annuity is to be distributed?

taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 777
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Customer reply replied 4 years ago

The trust does not direct the annuity

I have switched to the Q & A format, as it is easier to understand.

 

Normally, the trust document states how the annuity is to be distributed. If it does not, then the Trust takes the distribution. However, to avoid tax (trusts pay tax at a higher rate than individuals) the trust can distribute the income to the beneficiaries, and the beneficiaries then can pay tax on their own tax returns. On the Form 1041, the trust will get a deduction for the payments it makes to the beneficiaries.

 

I hope that this answers your question! If you have any more, please feel free to ask! If you have found my answer to be helpful, please rate me highly! I would appreciate that!

 

Thanks again! Have a great day!

 

Roger

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