I'm helping the trustee of a complex trust with the 2018 Federal Fiduciary Return, which I plan on marking as the final return for the trust, on account of all income-producing assets being liquidated (2018 JUN) and everything save for $4k in cash having been distributed (2018 JUN).
According to the 2018 Form 1099-B--the only tax form received by the trust in 2018--as well as to my calculations, the sale of the mutual fund held by the trust (what I refer to in the first paragraph as "all income-producing assets being liquidated) resulted in total (short- and long-term) capital gains of about $20k.
The trust was established in CA; the settlor of the trust passed away in 2011; and two of the beneficiaries live in OR.
My question is: Can the trustee allocate the long term capital gains to beneficiaries? I believe the trustee has the authority to do so because of the following clause found in the trust:
"17. Adjust for Tax Consequences. The Trustee may take any action and to make any election to minimize the tax liabilities of the trust and its beneficiaries. The Trustee shall have the power to allocate the benefits among the various beneficiaries and shall have the power to make adjustments in the rights of any beneficiaries, or between the income and principal accounts, to compensate for the consequences of any tax election or any investment or administrative decision that the Trustee believes has had the effect of directly or indirectly preferring one beneficiary or group of beneficiaries over others. In making such adjustments, the Trustee may ignore or adjust for different tax bases of assets distributed to beneficiaries."
Thanks in advance.
