Trust Income

[Acownt4it]

Just when I think I understand these dang things.

Need some confirmation on my thought process please.

I have an irrevocable trust for a minor child.

The trust has income of $140

First of all do I have to file a 1041 because gross income is under $600? I am getting hung up on this because in TB pg 21-2, filing requirements for Trusts:
* Any taxable income,
* Gross income of $600 or more, or
* A nonresident alien beneficiary
Are points 1 and 2 an either/or requirement or does it have to meet both criterias?

If it is either/or stop reading the rest of this post, you answered my question. If not, keep reading.

The trust documents do NOT state that income has to be distributed each year. It says "Any income not so paid in each year shall be added to principal at the end of each year."

This is a complex trust because it does not meet the simple trust rules because it is not required to distribute all accounting income. (right?)

Because it is a complex trust, the exemption is $100 and the trust has $40 (140-100) of taxable income and the tax due is $6.00 (40*15%).

Any thoughts to put me back on track?

[S T]

I think

Noel,

I looked it up in the 1041 instructions and I think

1. "Any" taxable income OR
2. gross income of $600 or more regardless of taxable income

So you could have income that is not taxable (maybe tax exempt)

So I would say, you would have to file and pay taxes of $6

Sandy

[Acownt4it]

Sandy

Thanks, that is what I was afraid of.
This particular client has 10 grandchildren and they all have these trusts. He will have to pay $6 tax for each of them.
Good money for me, but very time and paper consuming for this minor amount of money to report.
On the other hand I need to make sure these are all done by the book because this income comes from a Family Limited Partnership and they are heavily audited.
So, one more day of preparing and printing trusts for this one client. $$
Thanks again.

[JoshinNC]

$300 per trust,

Thanks, that is what I was afraid of.
This particular client has 10 grandchildren and they all have these trusts. He will have to pay $6 tax for each of them.
Good money for me, but very time and paper consuming for this minor amount of money to report.
On the other hand I need to make sure these are all done by the book because this income comes from a Family Limited Partnership and they are heavily audited.
So, one more day of preparing and printing trusts for this one client. $$
Thanks again.

10 trusts = $3000 divided by 10 hours = $300 per hour

Not a bad days work my friend.

[Acownt4it]

I am not complaining

mind you.
This particular client has 12 other trusts, 4 personal, one gift tax and one FLP return. I just feel like I am never going to get this one off my desk.
It's multiplying like rabbits.

Enough whining. Back to work I go.