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Once the original single "income beneficiary" of a QSST

Once the original single...

Once the original single "income beneficiary" of a QSST Trust dies, and the secondary principal beneficiaries take over, how do you report that on the QSST?

Accountant's Assistant: The Expert will know how to help. Please tell me more, so we can help you best.

Grantor dies, leaves S-corp stock in the Decedent's Trust, which is a qualified QSST. The beneficiary is his wife, who pulls out allincome fromt he Trust and reports the S-corp K-1 on her personal return. Now she has passed, and the remainder beneficiaries of the stock receive the income and,within two years, they have the stock distributed to them. How do I report their share of the S-corp income during the two year admin period?

Accountant's Assistant: Is there anything else the Expert should be aware of?

The QSST Trust also has some cash in it which gives off income.

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Answered in 52 minutes by:
9/4/2017
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,123
Experience: 35 years tax experience, including four years at a Big 4 firm.
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Hi from just answer. I'm PDtax. I will assist.I need to confirm something before responding. Please bear with me...
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Customer reply replied 11 months ago
No hurry. At the office pulling my hair out! :)
Would a phone call be better? I do need some background on the inheritees.
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Customer reply replied 11 months ago
OK. We should be able to work this through by e-mail.
Customer reply replied 11 months ago
let me know what you need. I'll be here!
Ok. Let's assume the inheritors qualify as shareholders.At date of death the encompasses to the estate.
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Customer reply replied 11 months ago
the successor beneficiaries have received the stock from the S-Corp as part of their inheritance.
Sorry, trying speak to type.Inheritees.Income passes
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Then they accept the income personally. The trust might liquidate or remain. Depends on the trust instrument.
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It is the inheritees income after date of death to present. Some qsst trusts can report income, yours does not.
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Customer reply replied 11 months ago
I agree with that. So, now I have a Trust that has a K-1 from the S-corp, but also has some passive income from a couple of bank accounts. The original Trust CPA allowed expenses and passive income as part oft his Trust.Do I prepare a K-1 from the Trust showing the income from the passive bank accounts on the interest income line in addition to any expenses on the regular K-1, page 1. Then on page 2 show the amount that flows from the K-1 of the S-Corp directly, in relation to the percentage of the stock that they own after the death of the original beneficiary?
Do I prepare a K-1 from the Trust showing the income from the passive bank accounts on the interest income line in addition to any expenses on the regular K-1, page 1. YES Then on page 2 show the amount that flows from the K-1 of the S-Corp directly, in relation to the percentage of the stock that they own after the death of the original beneficiary?I'm not following part 2. Each shareholder will get their own K-1.And I think the page 1 interest income report after expenses will be enough. Please confirm.
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Customer reply replied 11 months ago
When I have seen QSST income reported previously, I have seen a separate schedule, or page 2 comments, a schedule showing the beneficiaries percentage of the S-corp. It will say, " Qualified Sub chapter S Trust pass through Entity, 95-xxxxx". Then show "Line one ordinary income $xx,xxxxx". And so on.This way the amount coming to the beneficiary through the K-1, as from a brokerage account, is separate from the amount coming directly from the S-Corp.This is why I'm confused. I haven; seen a QSST before that isn't just a straight Grantor pass-through. This one is a Decedent's Trust that owns the S-Corp AND has other types on income besides the S-Corp.
Got it now.I agree with the schedule treatment. It is because there was multiple income from the s corp, both trust and nontrust.The reason for the schedule is the s corp income reporting could be tracked to the 1099s it receives. Allows for 1099 matching.Thanks for asking at just answer. Positive feedback is appreciated, as is a bonus if warranted. I'm PDtax.
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Customer reply replied 11 months ago
Just to be certain...You agree that passive income, interest and dividends, and expenses, that are not S-corp related, can go on the front of the Decedent's Trust K-1 and be reported on the beneficiaries return as a pass through from the Trust.While income or expenses from the S-Corp K-1 can go on an attached schedule showing a straight pass-through to the beneficiary, at their ownership percentage,as a pass through from the S-Corp.
I do. Makes sense.
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,123
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Customer reply replied 11 months ago
Thanks. It's always wonderful having someone to bounce things off of!
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