Irrevocable Trust

[nypreparer]

A husband and wife have an irrevocable grantor trust. They are responsible for paying the taxes at the personal level for dividends and interest. Am I correct that a 1041 is no necessary? The 1099s are in the EIN, but they can be put on the parent's 1040.

[terryats]

It is my understanding that unless it is an intentionally defective irrevocable grantor trust a 1041 is required, and all income is reported on the 1041, and cannot be reported at the personal level.

[New York Enrolled Agent]

It is my understanding that unless it is an intentionally defective irrevocable grantor trust a 1041 is required, and all income is reported on the 1041, and cannot be reported at the personal level.

I don’t believe that is correct. Assuming arguendo that it is a grantor trust, then Reg. 1.671-2(a) says the income is taxed on the taxpayers individual return. The 1041 can serve as a conduit with a grantor statement.

[Snaggletooth]

I've done a couple of these this year. I distributed the income to the beneficiaries via a 1041 (K-1). Hope that was correct.

[New York Enrolled Agent]

I've done a couple of these this year. I distributed the income to the beneficiaries via a 1041 (K-1). Hope that was correct.

Grantor trusts don't use K-1 forms - were they grantor trusts? Simple Trusts and Complex trusts would use K-1 forms to show the income that was passed to the beneficiaries.