Reading through this thread I get partial answers. I'm dealing with an irrevocable trust and understand that if any current year income is distributed, it is reported on a K1 and the beneficiary has to report it on their taxes and pay tax. I also understand that if trust principal is distributed, it is at the discretion of the trustee and that this is not taxable to the beneficiary since tax has already been paid on this money. The definitive answer I'm looking for is (1) does the trust have to report a distribution of principal and if so, on what form and (2) does the beneficiary have to report the distribution of principal and if so, where on form 1040? Someone answered schedule B, line 10 but that is obviously incorrect as there is no line 10. If anyone can answer, I would appreciate it, thanks.
