I am the trustee of an Irrevocable Trust, my parents are the Grantors. The Trust does not name any Beneficiaries, but it does state that the Trustee shall distribute the net income to the Grantors (in quarterly or more frequent installments). In researching this issue online, I found information that according to the Internal Revenue Service, a grantor may not be the irrevocable trust beneficiary, and that combining the two roles may be an abuse of trust tax laws. So as far as preparing the taxes, how would I report this? I understand that Form K-1 is supposed to be completed and sent to each Beneficiary for income distributed to him or her, but even though the income was distributed to my parents it seems they cannot be Beneficiaries?
Thanks in advance for any clarification.
