I would have to take the Trustee’s letter as the only viable answer to Mike9241 that it doesn’t provide instructions and it doesn’t indicate on which form (1099 Int or K-1) but I’ll be obliged to do the K-1 instead.
Does it matter knowing the intent of the letter and what advise or action should I take as appropriate in this matter? Before I go on to disclose its contents, I received this letter in March 2024 before the 2023 tax return was due but didn’t do anything because I was confused and concerned what to do. I didn’t talk to a tax professional because I thought I could handle it until the letter stated “if required” and that through me off. In addition, page 2 containing the financial numbers were largely negative (meaning losses) and in 1099 Int and K-1 they rejected the negative passive income numbers. Therefore, I left the passive income out of my original tax return and Amended 1for 2023.
This one paragraph of the letter, I believe was crucial to reconsidering by including it in my 2nd Amended Return to the IRS and FTB (California).
By the Trustee Liz Freeman March 28, 2024, page 1.
”Enclosed is Substitute Grantor letter for the period August 1, 2023 - December 31, 2023. The Substitute Grantor letter includes your share of income and associated expenses related to your interests in the GWG Wind Down Trust for the period August 1, 2023– December 31, 2023. We advise you to seek advice from a tax professional as to the potential inclusion of these amounts in a Federal Income tax return. Page 2 imbedded in between after my name as Grantor and name of the trust, GWG Wind Down Trust was this statement “The following income, deductions and credits are to be reported on the Federal Income Tax Return of the above named grantor, if required.”
Passive Income is —$2,431.79.
Other Income $470.27
Deductions
Attorney and Accountant Fees $175.02
Administration Cost $406.24
Other Information
Loss on Life Insurance Policies, —$1,654.72
Interest Expense -$770.63
Management fee $6.44
Total Passive Income ((loss) from business
—$2,431.79.
I know the $ detail is not necessary but I added it anyway.
