<phillysle...[at]verizon.net> wrote:

- quote -

The regulations provide for a couple of different ways to
report things in the case of a grantor trust.

1. The default way. Income is reported to the trustee
using the trust's EIN. The trustee files a 1041 and checks
the "grantor trust" box on page 1. The trustee must leave
the rest of the 1041 blank. Instead, the trustee attaches a
statement (not a K-1) to the 1041 explaining all of the
income of the trust and the identity of the grantor. The
1041 return and the statement are filed with the IRS and the
statement must also be provided to the grantor, who then
reports the income on the grantor's 1040.

2. Opional Method #1. Income is reported to the trustee
using the grantor's social security number. The trustee
provides the grantor with a statement of all of the income
reported to the trustee, and the grantor reports this income
on the grantor's 1040. No 1041 is filed. This is by far the
most common way to handle things.

3. Optional Method #2. Income is reported to the trustee
using the trust's EIN. The trustee files a 1099 with the
IRS indicating that the income should be reported on the
grantor's tax return. The trustee provides the grantor with
a statement of all of the income reported to the trustee,
and the grantor reports this income on the grantor's 1040.
No 1041 is filed. I have never seen this method used in
real life.

There's another method that can be used if there are two or
more grantors and if the grantors are not married. I've
never seen that method used, either.

--Chris

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jo <phillysleuth[at]verizon.net> wrote:

- quote -

I think Banjamin was talking about trusts in general, not
specifically revocable trusts. The last time I checked the
IRS actually prefers that no return be filed for a revocable
trust, but that all its income is reported on the grantor's
return. In fact these days they don't require (or even
want) the trust to get a tax ID number until it becomes
irrevocable.

Stu

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jo <phillysle...[at]verizon.net> wrote:
- quote -

In a nutshell Ben's post should be shredded as it is
irrelevant. You either have a grantor- revocable living
trust/1040 situation, or you have an irrevocable trust /
1041 situation. There are other "grantor trust"
situations where a 1041 is required even though all the
income is pass-through and reported on someone's 1040. I'm
the trustee of several of these where the child is the trust
beneficiary but all the income is taxed on the parent's
return. None of these are your situation. You have a
simple REVOCABLE tiviing trust where the current
beneficiaries are the grantors and you should ignore it for
tax purposes until one of the grantor's dies--then it gets a
lot more complicated. There is no ohter "choice", nor
dependentcy upon income of any kind. The 1041 Instructions
are confusing in that they dwell on these other types of
Grantor trusts, but if you read the instructions on page 5
you would use optional method #1 and the TIN # is your SS
#.There used to be a specific statement that directed you r
situation to NOT file a 1041, but I can't find it this
morning.

Believe me. Do not use a 1041, Do not apply for a TIN # for
your trust. Report all the income on your 1040.

ed

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jo wrote:

- quote -

If the grantor is not the trustee, the trust must obtain an
EIN and file a 1041 as a grantor trust. If the grantor is
the trustee, the income is reported on the grantor's 1040
and no 1041 is filed.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

jo <phillysleuth[at]verizon.net> wrote:
- quote -

He probably means that you can file a Form 1041 if you
choose. However that form will show that you are the one to
be taxed on the trust's income, so it will all show up on
your 1040 in any case.

Stu

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Stuart A. Bronstein" <spamt...[at]lexregia.com> wrote:
- quote -

I'm confused. Most are saying no need to file a return for
the revocable trust (which is equivalent to a grantor
trust), and in fact, one should not. I still don't
understand what Ben's statement about "the filing
requirement depends on income". Is there a situation where
these trusts do have to file a return? Remember, I only
know enough to be dangerous :}

jo

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On Nov 3, 4:11 pm, jo <phillysle...[at]verizon.net> wrote:

- quote -

The instructions for Form 1041 say that where a grantor
trust is considered owned by one person, you are to file
Form 1041 by filling in the top portion and attaching a
statement to the form listing the name, address, and ID No.
of the person to whom the income is taxed, and the income,
deductions, and credits.

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"Paul Thomas, CPA" <paulthomascp...[at]bellsouth.net> wrote:
- quote -

It sounds like you are saying you can file on your
individual tax form or an alternative. What determines "if
you like"? What is the alternative to filing on your own
form?

Jo

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Herb Smith <smithff33[at]aol.com> wrote:
- quote -

I wouldn't call it incorrect. He says the filing
requirement depends on income. In the case of a grantor
trust, the trustor is taxable on all trust income, so the
trust itself as no taxable income. As a result, there is no
need to file a return for the revocable trust.

Stu

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jo <phillysle...[at]verizon.net> wrote:
- quote -

The instructions for 1041 are quite specific that you MUST NOT
file it for a standard revocable trust. Until the first death, you
ignore that it is a trust for tax purposes. File 1040 as usual
ignoring that you have a revocable trust.

ed

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"Benjamin Yazersky CPA" <john...[at]nowhere.com> wrote:
- quote -

This answer is incorrect for revocable trusts (Living
Trust). Such a trust is an ignored entity for income tax.

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"jo" <phillysleuth[at]verizon.net> wrote
- quote -

http://www.irs.gov/businesses/small/...106551,00.html

Q: What is a grantor trust?
A: "Grantor trust" is a term used in the Internal Revenue
Code to describe any trust over which the grantor or other
owner retains the power to control or direct the trust's
income or assets. If a grantor retains certain powers over
or benefits in a trust, the income of the trust will be
taxed to the grantor, rather than to the trust. (Examples,
the power to decide who receives income, the power to vote
or to direct the vote of the stock held by the trust or to
control the investment of the trust funds, the power to
revoke the trust, etc.)

- quote -

An "irrevocable trust" can be treated as a grantor trust if
any of the grantor trust definitions contained in Internal
Code §§ 671, 673, 674, 675, 676, or 677 are met. If a trust
is a grantor trust, then the grantor is treated as the owner
of the assets, the trust is disregarded as a separate tax
entity, and all income is taxed to the grantor.

Q: Do trusts have a requirement to file federal income tax
returns?

A: Trusts must file a Form 1041, U.S. Income Tax Return for
Estates and Trusts, for each taxable year where the trust
has $600 in income or the trust has a non-resident alien as
a beneficiary.

- quote -

All the income can be reported on your individual income tax
returns if you like.

--
Paul A. Thomas, CPA
Athens, Georgia

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"Benjamin Yazersky CPA" <john...[at]nowhere.com> wrote:
- quote -

I'm not clear what your answer means. Do you disagree with
the other posters that a 1041 is not needed and that I
report income on my 1040 just as I always have? What do
you mean about the income requirement determining filing?

Thanks

Jo

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jo <phillysle...[at]verizon.net> wrote:

- quote -

It's still a 1040 with donor's SS# UNTIL the first grantor
dies. specifically do not file a 1041.

ed

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"jo" <phillysleuth[at]verizon.net> wrote:

- quote -

The filing requirement for the 1041 are independent of the
filing requirements for the 1040.
Each stands on its own.
Generally, the filing requirement depends on income.
Remember to also check the state filing requirements for the
individual and trust tax returns.
Each state has its own rules.

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

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jo <phillysle...[at]verizon.net> wrote:

- quote -

For tax purposes the trust does not exist as a separate
entity while you are alive. File your normal 1040, including
all income received through the trust. The trust DOES NOT
file a separate return and does not need an EIN (uses your
SSN).

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

jo <phillysleuth[at]verizon.net> wrote:

- quote -

A revocable trust is completely transparent for tax
purposes. In other words it's treated as though it doesn't
exist. You continue to file your 1040 and the trust files
nothing, as long as it is revocable by you.

Stu

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When one establishes a Revocable Trust to shield assets from
probate, what ramifications, if any, are there for tax
preparation? Does a tax return of any kind have to be filed
for the trust? Would I still file a 1040?

jo

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >