It depends. All income is reported at the entity(Trust) level. If the distributions were distributed to the beneficiaries, then the income would be reported on their k-1's to report on their own individual tax returns according to the Trust allocation agreement. If the income was not passed to the beneficiaries on a k-1, then the trust will need to pay the tax.
As far as a stock dividend, you would add this to the basis of the stock that the trust owns in the insurance company and then apportion the amount of the dividend to each share of stock. For an example, if you own 100 shares at $10 a share and the stock dividend is $1000, then each share of stock will have an added basis of $10 thus each share of stock is now worth $20 for an overall basis of $2000. Knowing the basis for each share of stock is important especially if you decide to sell fractional shares instead of the entire lot in the future.
This is not a taxable event thus the dividend is not taxable. The stock dividend is not reported in your return but added in at the accounting level to the basis of your stock.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
