Problems with Trust Tax Return
by Jonathan Todd
I was asked to help a Trustee pull together their records and provide schedules for the purpose of filing their annual trust tax return. I have prepared individual tax returns for the past 25 years, but have never prepared one for a trust. The problems that have emerged are as follows:
1. There has been no tax return filings 11 out of the 12 years.
2. In conducting the writing up, I identified a series of transactions that I believe violiates the coverance of an Irrevocable Trust, where the Grantor received funds to supplement her cost of living as well as the Trustee; who is the daughter. Is there any way that these transaction can be classified, as a taxable event to each and allow the trust to stay valid, or can the Trust be dissolved?
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