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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29941
Experience:  Taxes, Immigration, Labor Relations
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Do I have to put my revocable trust on my 1040 tax return?

Customer Question

Do I have to put my revocable trust on my 1040 tax return?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
If that is a revocable living trust - for income tax purposes - that is disregarded entity - and all income is reported on owner's individual tax return.So - if your revocable trust has taxable income - that income is reported on your tax return. If there is NO income - nothing is reported.
Expert:  Lev replied 2 years ago.
A revocable living trust is an arrangement created by a written agreement or declaration during the life of an individual and can be changed or ended at any time during the individual's life. A revocable living trust is generally created to manage and distribute property. Many people use this type of trust instead of (or in addition to) a will.
Because this type of trust is revocable, it is treated as a grantor type trust for tax purposes.
A trust is a grantor trust if the grantor retains certain powers or ownership benefits. This can also apply to only a portion of a trust.
In general, a grantor trust is ignored for income tax purposes and all of the income, deductions, etc., are treated as belonging directly to the grantor. This also applies to any portion of a trust that is treated as a grantor trust.
The John Doe Trust is a grantor type trust. During the year, the trust sold 100 shares of ABC stock for $1,010 in which it had a basis of $10 and 200 shares of XYZ stock for $10 in which it had a $1,020 basis.
The trust does not report these transactions on Form 1041. Instead, a schedule is attached to the Form 1041 showing each stock transaction separately and in the same detail as John Doe (grantor and owner) will need to report these transactions on his Form 8949, Sales and Other Dispositions of Capital Assets and Schedule D (Form 1040). The trust does not net the capital gains and losses, nor does it issue John Doe a Schedule K-1 (Form 1041) showing a $10 long-term capital loss.
Let me know if that answered your question.