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TRUST RETURN FORM 1041. THE ONLY ASSET (THE DECEDENT'S HOME)

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I AM FILING TRUST...

I AM FILING TRUST RETURN FORM 1041. THE ONLY ASSET (THE DECEDENT'S HOME) WAS USED AS A RENTAL PROPERTY FOR 9 YEARS AND THERE IS CAPITAL GAIN.

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

MY QUESTION IS: DO THE TWO BENEFICIARIES RECEIVE A FORM K-1 OR CAN THE TRUST PAY THE TAX DUE?

Submitted: 4 months ago.Category: Tax
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Answered in 1 minute by:
3/21/2018
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,674
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My name’s Lane …

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents, since 1986.

I’m reading your question now.

Bear with me a moment while I type up my response.

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Then if you have further questions we can go from there.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 months ago

Actually, you can do either, but you might want to consider the k-1, depending on the size of the gain.

...

Trusts reach the highest tax bracket (39.6) at only a little over 12,000 of income.

..

Individuals, however, have to get to over 400,000 of income in a year before hitting that 39.6% bracket.

...

This means that the trust (with income over 12,000) will pay capital gains tax of 20% - plus the 3.8% net Investment Iccome tax (obamacare tax).

...

Where the individuals will likely be at 15.

...

But yes you certainly CAN just let the trust pay the tax.

...

If you DO want to pass out the gain via the 1041's K-1, you just take a distribution deduction for that amount on schedule B of the 1041 so that the trust pays no tax, and again, pass it out via the k-1 to the individual beneficiaries.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 months ago

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars on your screen, and then clicking “submit")

That’s the only way JustAnswer.com will credit me for the work.

...

I hope you’ll rate me based on accuracy and thoroughness, rather than any good news / bad news content

But again, let me know if you need more here,

Lane

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