thank you for everyone's replies. I am starting to
understand this trust alot more now. I will seek
professional help.

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On Mar 31, 9:15 pm, "whiskers" <whiskers...[at]hotmail.com> wrote:

- quote -


Would have to read the actual detailed description as
written to be able to interpret the terms of the Trust as to
whether you would be within its terms to take all the
remaining income after that distributed to the other
beneficiary. It's clear from what you provided that for an
"ordinary" year w/ no unusual circumstances that
compensation can't exceed the 0.75% of the principal so then
how much you are allowed to distribute depends on the size
of the Trust's assets. (Of course, that presumes there
aren't other terms/conditions or caveats that would alter
this restriction elsewhere in the Trust.) So, this then
raises the question of how to ascertain that value since
apparently from your description the primary assets aren't
stocks and bonds with a fixed daily trading value which is
unequivocable. You need to get professional help here --
the organization who drafted the trust would probably be a
good place to start as well as or in addition too a
qualified accounting/tax professional. Who is named as a
succesor Trustee or other terms of succession or transfer
trusteeship in case of incapcitation or other circumstances?
That person or firm if a professional entity not just
another relative would also be a possible place to turn for
advice/consultation.

For the relatively minor point, as far as I know, any
distributions paid from the Trust, considered compensation
or not, are documented by a K-1, not a 1099.

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"whiskers" <whiskers...[at]hotmail.com> wrote:

- quote -

The trust is a simple trust in that all the income must be
distributed, however, that just means that the trust
exemption is $300 instead of $100 fora complex Trust.
However since all the income will be distributed there's
nothing left to apply the exemptions to. If you don't
distribute all the income it isn't a simple trust.

Personaly I would NOT pay myself the allowed Trustee Fee as
it appears to be voluntary and is coming out of your income
distibution and shifts passive income to self employed
income which requires paynent of SE taxes. If you do pay
yourself a fee, you don't need a 1099. Just write a check.

You should use form 1041 and distribute the income on K-1s
to your sister ($2,000), and the remainder to yourself. You
can play games with the Exemption and retaining the $2,100 (
or whatever amount) of income in the trust that's in a lower
bracket than you are but if you don't distribute all the
income you only get the $100 exemption. You'll only save
about $200 (10% of $2,100) and you won't get the $2,100.

ed

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The trust states: My sister shall receive $2,000 per month
of the rental income. I shall receive the rest of the rental
income, a portion or all of which may be considered
compensation for my services as trustee.

what confuses me is what the trust says under trustee
compensation. It states: the trustee shall be entitled to
pay himself reasonable compensation from time to time
without court order, and for reimbursement for any expenses
of the trust which trustee has paid. Trustee's compensation
shall not exceed three-fourths of the percent (. 75) of the
average net value of the principal of the trust estate
during each calendar year for all ordinary services rendered
and reasonable additional compensation for any extraordinary
services.

Could I file a K-1 to myself for the rest of the income and
leave about $2,000 in the trust so the trust will pay no
tax? Or am I able to give myself a 1099-misc for the income
I receive as compensation for my services as trustee?

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"whiskers" <whiskers...[at]hotmail.com> wrote:

- quote -

How did you distribute the income to your sister? You
should have used a 1041 K-1. Distribute your income to you,
then the trust isn't taxed on it, you are.

If you didn't know how to do this get professional help NOW.

ed

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"whiskers" <whiskers222[at]hotmail.com> wrote:

- quote -

what are the terms of the trust?

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whiskers wrote:

- quote -

You need to follow the terms of the trust, does it allow for
distribution of all income? I see for 06, the rate is 25%
over $2050 of taxable income. You may want to see if you can
distribute all but that amount to the beneficiaries, but
either way, the trust docs should spell out what you must
do, and what flexibility you have.

JOE

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"whiskers" <whiskers...[at]hotmail.com> wrote:

- quote -

Well, the trust deducts from its income the net income that
is distributed or distributable to the beneficiaries. It
all depends on the terms of the trust. It sounds as though
you need professional help to determine the trust's DNI
(distributable net income), which is taxed at the
beneficiary level.

Katie in San Diego

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"whiskers" <whiskers...[at]hotmail.com> wrote:

- quote -

You already make discretioanary distributions to your
sister, so why not make such K-1 distribution to yourself?

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"whiskers" <whiskers222[at]hotmail.com> wrote:

- quote -

If you properly distribute the income to trust
beneficiaries, the beneficiaries pay the tax and the trust
gets a deduction.

Stu

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I have a complex trust that I am the trustee of since my
father died. In this trust is commercial rental property
that receives monthly rental income from a gas station that
sits on the land. A portion of the rent is distributed to my
sister. I know that the tax rates for trusts are very high
compared to my 15% tax bracket I am in. Is there anyway I
can save money on the taxes on the rental income I receive
every month from the trust? I am paying 35% taxes on money
over $10,450. If I were to receive this money as myself It
would be cheaper for me being that I am in the 15% tax
bracket. Is there anyway to do this? Is there anyway a trust
can save money on taxes?

Thank you.

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