Trust ded?

[TAX4US]

I need a little guidance. TP decd. Will provided that all assets be converted to cash. That cash to be invested in a trust fund. Trust document and will both say that 10%of account value with value being determined at end of year for that years payout each and every year to be paid to Humane society. Some times there is not enough of cash to pay out so brokers sells some of the stock to enable this payout. All cash in trust comes from dividends and sale of stocks. My question is that since this is paid from earnings of the trust can trust take a deduction for this payout?

[Burke]

I need a little guidance. TP decd. Will provided that all assets be converted to cash. That cash to be invested in a trust fund. Trust document and will both say that 10%of account value with value being determined at end of year for that years payout each and every year to be paid to Humane society. Some times there is not enough of cash to pay out so brokers sells some of the stock to enable this payout. All cash in trust comes from dividends and sale of stocks. My question is that since this is paid from earnings of the trust can trust take a deduction for this payout?

It should be passed through by virtue of the DNI calculation deduction on page 2 of the 1041 return. The recipient (beneficiary) will receive a K-1 with the taxable portion(s) up to the extent of the income disbursed each year, just as any other beneficiary does, even if this recipient is a qualified tax-exempt organization and they don't pay any tax on it. I am a little confused as you say "will provided that all assets be converted to cash" and "that cash to be invested in a trust fund." But the trust fund is invested in stocks?

[TAX4US]

Thank you. I will go back to the trust doc and the trustee to hopefully figure out. I figured the charity would be considered just like an heir.