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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29571
Experience:  Taxes, Immigration, Labor Relations
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My family is thinking of setting up GST trust. Is the farm

Customer Question

My family is thinking of setting up GST trust. Is the farm rental income subject to trust tax rates or can it be passed on to the beneficiaries?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

For income tax purposes - GST trust is no different from other types of trusts.

If income realized by the irrevocable trust (including rental income) is distributed to beneficiaries or must be distributed according ti trust documents - that income is passed to beneficiaries and reported on K1 statement to each beneficiary and deducted on the income tax return of the trust (form 1041).

If however income is not distributed and is not required to be distributed - it is taxed for the trust based on trust's income tax rates.