Question
In 2014, the Trust had items of income and expense as follows: Amount Allocable to Income Principal Qualified Dividends $30,000 Ordinary Dividends 1,000 Rental income
In 2014, the Trust had items of income and expense as follows:
Amount Allocable to
Income Principal
Qualified Dividends $30,000
Ordinary Dividends 1,000
Rental income from house 18,500
Charitable Gift to Salvation Army 15,000
Tax-exempt interest 15,000
Rental expenses[1] 3,500
Trustees fee 600 $ 600
Fee for preparation of tax return 500
Capital gain on sale of stock[2] 12,000
Distribution of income:
Tommy 18,000
Telly 9,000
The trust agreement appointed Special Bank and Trust as its trustee with broad discretionary authority, including the Trustees authority to distribute income to Tommy and Telly during its 20-year term. The trustee has decided to allocate a portion of the estimated taxes to the beneficiaries this year. On July 1, 2021, the Trust will terminate and the assets will be distributed equally to Tommy and Telly, irrespective of any distributions the beneficiaries received during the life of the Trust (i.e. separate shares are not maintained for Tommy and Telly). The Trustee has never allocated any estimated tax payments to the beneficiaries and the Trust provides that capital gains are to be treated as principal by the Trustee.
Special Bank and Trust Tommy Hirsch Telly Hirsch
1234 Money Lane 456 Avenue B. 1515 B-Street, Room 222
Wahoo, MI 48007 Lava, MI 48008 Liva, MI 48009
EIN: 33-989898 SS: 444-99-5555 SS: 444-98-6666
Please prepare the 2014 Form 1041 and any other form or schedule required
[1]The residential rental property is located at: 2288 Greenfeld Avenue, Austin, Michigan 48333. The expenses include: $250 commission paid to real estate management company for managing rental property, $2,000 for depreciation of the property, $1,250 for maintenance expenses.
[2]Trustee sold Corporate Stock on June 23, 2014. The stock was purchased for $8,000 on June 23, 2007.
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