Since this trust is intending to terminate and because the tax rate would likely be much higher if not passed through to beneficiaries on Schedules K-1, it would seem sensible to pass this income through to the trust beneficiaries. If this taxable income is passed through to the trust beneficiaries, the trust beneficiaries will be responsible for reporting this income on their individual tax returns for the year that contains the end date of the trust income tax year in which the income was received.
