Past years trust returns

A new client has irrev. grantor trust. They had gotten notice that there were no trust returns filed for several years. The investments are under the trust number but had been reporting on their 1040. Can I just send the front page of the 1041 with the rev proc election to report on personal 1040. Do all these investments have to be entered and showing on a grantor letter? attached.


thanks

Michele

Answer

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Grantor trust is ignored for income tax purposes. All of the income, deductions, etc., are treated as belonging directly to the grantor. Therefore:

  1. Fill in only the entity information of Form 1041.
  2. Don't show any amounts on Form 1041.
  3. Don’t file Schedule K-1 (Form 1041).
  4. Instead, show dollar amounts on an attachment to Form 1041.
  5. However, don't use Schedule K-1 as the attachment.


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Munti73 , Taxlady

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