Qualified Subchapter S Trust

[JSwaim]

I use Drake software. When preparing the 1041, I marked it a simple trust and it creates the grantor statement. He is not a grantor but the beneficiary of the QSST. Does anyone know if the statement is showing grantor information will it create a problem at IRS when he is actually a beneficiary? If I file the return electronically do I still need to send in the letter showing the IRS accepted the QSST status?

[Burke]

It is my understanding that a QSST must be required to pay out all income to the beneficiary. In addition, it may pay out principal only to that beneficiary. If a trust is allowed to distribute principal (or does so, even in the year of termination), it is not a simple trust but a complex trust. I am a little confused by your "grantor statement" problem. In my software it is not produced automatically with a 1041. It is a form which can be elected, but I don't use it, as the K-1 has all the necessary information. How did this QSST come to be created? The beneficiary is considered the owner of the stock in the QSST. He does not have to be the grantor.