I don't do a lot of 1041 trust tax returns but I got drug into this one.
Elderly Mom, set up a trust, effective date 1-1-09.
She funded the trust with a piece of investment property, ie, a condo unit, and also $100,000 in cash.
The $100,000 was in a checking acount and earned zero interest in 09.
The condo unit was not her main or second home, and it was not a rental, it was simply held vacant for investment.
Her cost on condo unit was $210,000 and there was a mortgage of $150,000 on it.
The trust was for the benefit of Mom while she was alive, and then for the benefit of her three adult children.
Mom died 3-1-09.
Son, daughter1 and daughter2 became the benificiaries of the trust, equal shares.
Son is the executor.
After Moms death, Son arranged for the condo to be sold.
The condo was sold 10-1-09 for $160,000, ie, at a $50,000 loss.
On 11-1-09, Son disbursed 1/3 of the net $ in the trust to himself, and 1/3 to daughter1.
Daughter2 is not able to handle her own financial affairs and so with the agreement of all beneficiaries her 1/3 of trust $ is left in the trust for her future needs and Son will remain as Trustee and release $ to her over the years as she needs it.
Son and daughter1 have no further interest in the trust assets or income.
There were a few expenses in 09 related to and/or paid out of the trust.
Funeral expenses for Mom $8000
Attorney Fee's regarding the trust and the condo unit $1500
Admin expenses paid to Son and others for Time and travel to handle all the above $7000.
So I am thinking out loud here and hoping someone will correct me if I miss the mark....
I file a 2009 1041 trust return and indicate it is a complex trust.
I have a $50,000 long term capital loss on the 1041 but it is unused and carried over on the 1041 to future years.
I have attorney fees $1500 and admin fees $7000 that create a net loss on the 1041 of $8500. The $8500 does not qualify for nol carryover treatment.
Moms $8000 funeral expense is considered a personal expense and is not deductible anywhere on the 1041 and appears nowhere on the 1041.
I dont have any K1 forms for 09 because there is nothing flowing thru to the benificiaries.
.....or......
I carry the $50,000 long term capital loss and the $8500 Fee's to three K1 forms in equal shares for 09.
For 2010, there is only one beneficiary and if the trust earns any net income, that net amount will flow thru to the beneficiary on a K1 form.
Sorry for the length of the post, sometimes I answer my own question just by taking the time to think about it and write it all out here on this board.
Any feedback is truly appreciated.
Hope everyone is still in good spirits
Harvey Lucas
Elderly Mom, set up a trust, effective date 1-1-09.
She funded the trust with a piece of investment property, ie, a condo unit, and also $100,000 in cash.
The $100,000 was in a checking acount and earned zero interest in 09.
The condo unit was not her main or second home, and it was not a rental, it was simply held vacant for investment.
Her cost on condo unit was $210,000 and there was a mortgage of $150,000 on it.
The trust was for the benefit of Mom while she was alive, and then for the benefit of her three adult children.
Mom died 3-1-09.
Son, daughter1 and daughter2 became the benificiaries of the trust, equal shares.
Son is the executor.
After Moms death, Son arranged for the condo to be sold.
The condo was sold 10-1-09 for $160,000, ie, at a $50,000 loss.
On 11-1-09, Son disbursed 1/3 of the net $ in the trust to himself, and 1/3 to daughter1.
Daughter2 is not able to handle her own financial affairs and so with the agreement of all beneficiaries her 1/3 of trust $ is left in the trust for her future needs and Son will remain as Trustee and release $ to her over the years as she needs it.
Son and daughter1 have no further interest in the trust assets or income.
There were a few expenses in 09 related to and/or paid out of the trust.
Funeral expenses for Mom $8000
Attorney Fee's regarding the trust and the condo unit $1500
Admin expenses paid to Son and others for Time and travel to handle all the above $7000.
So I am thinking out loud here and hoping someone will correct me if I miss the mark....
I file a 2009 1041 trust return and indicate it is a complex trust.
I have a $50,000 long term capital loss on the 1041 but it is unused and carried over on the 1041 to future years.
I have attorney fees $1500 and admin fees $7000 that create a net loss on the 1041 of $8500. The $8500 does not qualify for nol carryover treatment.
Moms $8000 funeral expense is considered a personal expense and is not deductible anywhere on the 1041 and appears nowhere on the 1041.
I dont have any K1 forms for 09 because there is nothing flowing thru to the benificiaries.
.....or......
I carry the $50,000 long term capital loss and the $8500 Fee's to three K1 forms in equal shares for 09.
For 2010, there is only one beneficiary and if the trust earns any net income, that net amount will flow thru to the beneficiary on a K1 form.
Sorry for the length of the post, sometimes I answer my own question just by taking the time to think about it and write it all out here on this board.
Any feedback is truly appreciated.
Hope everyone is still in good spirits
Harvey Lucas
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