Fiduciary Income Tax Returns

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 43-47

A trust is a separate legal entity and is generally treated as such for account-

ing, legal, and tax purposes.

One should bear in mind that after the trust is funded, generally annual

duciary income tax returns must be led with the IRS and with the state

(if applicable). There are certain exceptions to the annual ling require-

ments where the creator of the trust (grantor) is considered to be the

owner of the trust for income tax purposes.

The preparation of the annual federal duciary income tax return (Form

1041) may be a simple or difcult assignment, depending on many fac-

tors. These factors include

(1) the terms of the trust document and

(2) the state trust laws governing the trust document.

Under the Internal Revenue Code, a trust can be a simple trust or a com-

plex trust.

Basically, a simple trust under the IRS rules requires the trustee to

distribute the trust income annually to the income beneciary or bene-

ciaries, as the case may be.

A simple trust does not necessarily mean that the preparation of the

trust income tax return is an inexpensive proposition. The accountant

who prepares the duciary federal income tax return must rst read the

trust document and understand it. Obviously, the trustee who may be a

family member or a friend has the ultimate responsibility of reading and

understanding the terms of the trust document.

If the trustee has difculty in determining the meaning of the terms

of the document, then he or she should ask for help.

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FIDUCIARY INCOME

TAX RETURNS