I am preparing a Form 1041 for a Trust. The Trust comprises a vacation home and funds for its operation. There is a small amount of interest income that is more than offset by property taxes, resulting in negative accounting income every year. There are several Trust beneficiaries. Should the beneficiaries be able to recognize the Trust's negative income on their individual tax returns? Can the losses be allocated on form K-1 without some tangible "distribution" having taken place?
Thanks for your help,
MGD
