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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29965
Experience:  Taxes, Immigration, Labor Relations
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Customer Question

Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Yes. My name is ***** ***** I will be happy to help you. What's your tax question?

Customer: replied 1 year ago.
Hi Eva,I have a grantor trust return. The grantor deceased on 5/5/15 and the trust has received a 1099R. I am not sure where to put this on the return.
Expert:  emc011075 replied 1 year ago.

1099R is portfolio income. You can put it on line 8.

Items to be reported on line 8 include:

Unpaid compensation received by the decedent's estate that is IRD, and

Any part of a total distribution shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., that is treated as ordinary income.

Customer: replied 1 year ago.
I thought that the income would then go to the beneficiaries on a K-1 but it was on the 1041 and taxed at 39+%
Expert:  emc011075 replied 1 year ago.

I am not sure why. I will opt out to give another expert a chance answer.

Expert:  Lev replied 1 year ago.

You are correct - that income is PASSED to beneficiaries.
However - there are certain steps to follow.

Expert:  Lev replied 1 year ago.

First of all - we have to report that income on the trust tax return - form 1041 line 8 exactly as previous expert suggested.
Then - we deduct the SAME amount on form 1041 line 18 as Income distribution deduction
That will result ZERO taxable income for the trust and zero tax liability.

and finally - it will be reported on K1 which will be used by the beneficiary for his/her individual tax return preparation.

Let me know if you need any help with reporting.


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