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Tax.appeal.168, Tax Accountant
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Is money that was in a decedents checking account and then

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Is money that was in a decedent's checking account and then transferred to the subsequent trust account considered taxable income for the trust?
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In brief, based on the following information, the answer is no. SEE BELOW:

Income retained by the trust--Generally, trusts are “pass-through entities.” This means that trust income retained by the trust is taxed to the trust (but not if it is a charitable remainder trust), while distributed income is taxed to the beneficiary who receives it. In general, trusts are taxed like individuals for income tax purposes. General tax principles that apply to individuals also apply to trusts. A trust may earn tax-exempt income and may deduct expenses. Trusts are also allowed a small exemption. Income taxed to a trust is reported on Federal Form 1041 (U.S. Income Tax Return for Estates and Trusts). Federal Form 1041 is called a fiduciary income tax return because the trustee (i.e., the fiduciary) is responsible for filing it and for paying any taxes owed.


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