In the year a trustee dies, is the interest from S...
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pawcdw1217
Returning Member

In the year a trustee dies, is the interest from Series I Bonds that is reported to the trust taxable on 1041 K-1 to the deceased or to the beneficiaries?

The was a revocable trust. The Grantor was the deceased trustee.  The bonds were purchased years ago but interest was not actually paid until the bonds were cashed.  We obtained a TIN for the Trust and will file a 1041.
3 Replies
martinmarks1919
Level 8

In the year a trustee dies, is the interest from Series I Bonds that is reported to the trust taxable on 1041 K-1 to the deceased or to the beneficiaries?

This income should be reported by the trust.

SamS1
Expert Alumni

In the year a trustee dies, is the interest from Series I Bonds that is reported to the trust taxable on 1041 K-1 to the deceased or to the beneficiaries?

The income earned by the trust up to the point of death would be reported to the grantor.  Any income from cashing the bonds after date of death would become income of the trust.  In order for the income not to be taxed at the very high trust tax rates, be sure to make an income distribution to the beneficiaries before the trust year end of the trust so the savings bond income will be taxed at the lower marginal tax rates of the beneficiaries.

pawcdw
New Member

In the year a trustee dies, is the interest from Series I Bonds that is reported to the trust taxable on 1041 K-1 to the deceased or to the beneficiaries?

How do I input this on TT, since the 1099 was issued to the trust for the total amount and the money was issued to the beneficiaries.  However, all of the interest was earned up to the date of death, none after.  

The K1s kick the interest back to the beneficiaries, but it should go to the deceased grantor of the trust.

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