Are deposits/withdrawals into irrevocable trust account included in the net income calculation for form 1041? Or is "income" only actual income, like interest?

[Dan4]

My mother put her house into an irrevocable trust for her children.  The agreement structuring the trust requires her to pay a fixed amount monthly to cover local real estate taxes, property insurance, and housing association fees.  In turn, the trust pays the actual bills directly (from a bank account associated with the trust EIN).  The payments slightly exceed the expenses (by less than $100/month).  When considering income and deductions for the purpose of filing form 1041, are deposits/withdrawals into the trust bank account included as part of the net income calculation?  Or is "income" intended to cover only actual/real income, such as interest from the associated bank account?

[tagteam · Accepted solution]

"Or is "income" only actual income, like interest?"

That is correct, as a thumbnail synopsis; income is actual income, such as interest, dividends, rent receipts, etc.

Technically, payments into the trust, such as you described, basically constitute gifts to the beneficiary(ies).