As Trustee, I have been distributing funds in a Trust from when my mother passed away. It involved 2 minor children as beneficiaries at the time of her death, so the funds have been being slowly distributed per the trust terms. By the end of 2025, all but $6K will have been distributed, all due to 1 of the 4 beneficiaries. (Just saving some for any remaining expenses). There will not be any realized trust income this year or next year. However, there is a carryforward loss.
1. Can I file the final trust return for 2025, knowing there will not be any trust income in 2026? Or do I need to file a return in both 2025 and 2026, making 2026 the final year?
2. My understanding is that the carry forward loss is passed down to the beneficiaries via the K-1. At this point there is only 1 beneficiary still receiving trust funds. The other 3 beneficiaries have been paid in full. Does the carry forward loss get proportionally distributed based on the original trust allocations? In other words, I would issue a K1 for all of the beneficiaries in the final year, even though 3 of them did not receive a distribution this year? (They are still entitled to their portion of the carry forward loss, correct?)
Thanks for all your help!
