Yes, the trustee went to prison and a new trustee was appointed. The trust continues to receive income. Currently the interest received is taxable to the beneficiaries on a K-1. But since the beneficiaries were deprived of future non-taxable distribution of corpus, it seems unfair that any trust interest income should be taxable to them. Future income will never make up for the stolen money. Is there a workaround?"
You'll need to sign in or create an account to connect with an expert.
This is another case where the Tax Act of 2017, TCJA, effective for 2018, eliminated the tax deductibility of casualty losses such as the theft you mention.
This deduction used to cover a pretty wide-ranging set of circumstances, but that changed with the passage of the Tax Cuts and Jobs Act (TCJA) in December 2017. Beginning with tax year 2018 and through tax year 2025, you can only deduct casualty and theft losses if they're brought about due to an event that's been declared a disaster by the U.S. president.
You can still claim these losses on your 2017 Trust tax return, however, if you amend it—even without a presidential declaration. So if the theft occurred in 2015-2017, you can file an amended return to reduce tax paid that year of theft [2015 if ame'nded before 4/15/2017].
Still have questions?
Make a postDid the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.