Question
Rey Garcia set up a testamentary named Rey K. Garcia RLT trust for his son, Jason Garcia, and his daughter, Kyla Garcia. The testamentary trust
Rey Garcia set up a testamentary named Rey K. Garcia RLT trust for his son, Jason Garcia, and his daughter, Kyla Garcia. The testamentary trust specified the following:
1. Capital gains must be allocated to corpus.
2. The trust must not set up a reserve for depreciation. The depreciation allowable for tax purposes is to be allocated to the beneficiaries in accordance with the income allocated to each.
3. The trustee must distribute of the income to Kyla and may accumulate or distribute the balance between Jason and Kyla in any proportion as he sees fit. The trustee may also distribute an amount not to exceed 10% of the current income to Shady University.
4. The trustee also has the complete discretion to distribute corpus or accumulated income in any amount between Jason and Kyla.
During the calendar year ending 2021, the trust activity was as follows:
Gross rents $10,000 Rental expenses and repairs 2,000 Depreciation - straight-line 3,000 Dividends - GM 8,000 Taxable interest Bank of America 6,000 Tax-exempt interest Seattle Muni 5,000 Long-term capital gain 10,000 Administration expenses:
Allocable to corpus 2,000 Allocable to income 2,000 Charitable contribution to Shady U. 2,000 Distributions: Kyla 15,000 Jason 5,000
1. Prepare a workpaper using the 6-step method. 2. Fill in 1041 and all applicable schedules - 1041, Schedule D and K-1 for each beneficiary.
Other Information: Rey K. Garcia RLT Trustee: Cris Garcia Address: P.O. 4322, Seattle, Washington 96819 Federal ID Number: 82-1234567 This is an initial tax return created on 01/22/2022
Form 56 already filed
The Beneficiary Information Jason Garcia (575-22-1234) Kyla Garcia (576-86-1234) Address: P.O. Box 4355, Seattle, Washington 96819
Rental Property located at 123 Haleiwa Dr., Seattle, Washington 98128
Long Term Capital Gain Information:
10 shares of Apple Stock, purchased on 01/01/2020 for $10,000 and sold on 06/30/2022
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