Do I allocate capital gains to the beneficiary while doing a Trust Return even if no distributions were made? Turbo tax asks how much of the gain to allocate.

[tagteam · Accepted solution]

"Do I allocate capital gains to the beneficiary while doing a Trust Return even if no distributions were made?"

Generally you would not do that since capital gains remain with the trust as they are considered principal (corpus) of the trust; the trust retains them and pay any taxes due thereon.

Some trust instruments either mandate that gains be distributed or allow the trustee the discretion to do so. Thus, you have to read your trust instrument to determine if either of the foregoing are applicable (in which case, if you can allocate the gains to income and income is required to be distributed by the trust instrument, the gains are allocated to the beneficiary).

[tinadavejoint]

Thank You!