Trusts- revocable vs irrevocable

[kathyc2]

Am I correct on the following?

Income from a living revocable is reported under grantors SSN and reported on 1040.

Irrevocable has an EIN and income is reported on 1041

[New York Enrolled Agent]

An irrevocable trust can also be a grantor trust - all income would be on the grantor's 1040.

You can file a 1041 with a grantors statement to keep things nice and clean but the income is reported on the 1040.

[Burke]

Am I correct on the following?
Income from a living revocable is reported under grantors SSN and reported on 1040. Irrevocable has an EIN and income is reported on 1041

Basically, that is correct. As NYEA indicates, an irrevocable trust can also be a grantor trust. These are called IDGT trusts, and the income is taxed to the grantor. You can research this by googling Intentionally Defective Grantor Trusts. Income from RLT's are always taxed to the grantor, who retains the right to revoke it.

[kathyc2]

Okay, so I got the trust document and I'm still not sure what kind it is. Son is settlor and trustee.

Some key passages:

"create a trust for the purpose of holding and managing lifetime gifts"
"Settlor shall have the power to revoke this trust agreement and to alter or amend any of it's terms"
"Upon death of Mom or anytime earlier trust created by this agreement shall terminate"
"The life span of Mom is being used solely to set the duration of the trust and in no way shall this be construed as giving them any type of interest in the trust or any of the trust assets"

I'm reading this to be a living revocable??? In 2018 Mom sold all her non-qualified investments and put money in trust. So, in 2019 income should still be reported on Mom's 1040 even though trust EIN is on forms?

[terryats]

Can you reference a source that a grantor trust can be irrevocable trust, as my understanding is a grantor trust is a revocable living trust. The grantor can give control to the trust, thereby making it an irrevocable trust and all income would be reported on 1041 with trust ein

[New York Enrolled Agent]

Can you reference a source that a grantor trust can be irrevocable trust, as my understanding is a grantor trust is a revocable living trust. The grantor can give control to the trust, thereby making it an irrevocable trust and all income would be reported on 1041 with trust ein

IRC §§ 671-677

See also what Burke posted.

[terryats]

Thanks New York Enrolled AgentI only do 1 or 2 trust a year, and not very complicated. Thanks again, and I will be reading your reference after tax season