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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: 4,817
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 5 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 5 months ago
OK. We should be able to work this through by e-mail.
Customer reply replied 5 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 5 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 5 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 5 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 5 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)
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Satisfied Customers: 4,817
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Customer reply replied 5 months ago
Thanks. It's always wonderful having someone to bounce things off of!
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PDtax
PDtax
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