PA Schedule DD

[melpaw57]

Greetings all.

I'm working through a Pennsylvania State return for an irrevocable Trust. The only income for this Trust is interest, dividends, and Capital Gains (from Stocks and Bonds). The interest and dividends are distributed to the grantors (as per the language in the Trust).

So let's say the Total Income Reported from PA-41 is $30,000, $5,000 of which is Interest and Dividends.

So on the Schedule DD, I entered $25,000 for the portion that is not distributable.

Then down below that it asks for "Total Property Distributed". For the purposes of this form, are they considering "property" to include interest and income (in which case the amount entered here would be $5,000), or is it only physical property (like income from a home sale) in which case it would be $0.

If I'm not being clear trying to explain this pls. let me know.

Thanks so much.

[DianeW777 · Accepted solution]

First, the trust document must distinguish what is distributable to the beneficiaries. If you are clear on the rules for this Irrevocable Trust then you are using the correct figures for the lines mentioned. Any taxable income not distributed will be taxable to the trust. 

• Estates and trusts are entitled to deduct from their income any distribution of income that they are required to distribute (under the governing instrument or state law) or actually pay or credit to a beneficiary. This means the beneficiaries will pay the tax on the distributions paid to them.
• PA-41 Instructions
• PA Schedule DD and Instructions

@melpaw57 

[melpaw57]

Thank you Diane.