Closing Trust and Disbursing Assets

[frank527]

Parent had a Trust, all assets in Trust before death and parent died.

Have been filing 1041s since death and will file probably file the final 1041. The Trust terms requires the Trust to pay all taxes so the Trust reports all income, expenses and pays taxes so no pass-thru K-1s to beneficiaries for income/expenses. There have been losses from attorney fees, real estate taxes and small loss from sale of stock in prior years but no NOL as the assets were not used in a business. Current year will also probably have the same losses. No prior K-1s issued.

Starting to disburse assets to beneficiaries and setting-up closing the Trust. Just wanted to confirm an issue for K-1s. Are K-1s issued to disburse assets to beneficiaries though the assets distribution should be tax free inheritance, i.e. nothing sold but rather distribution in kind of the inherited assets? This assumes no large loss from sale of stock that might be carried over. There might be a tiny carry-over loss from stock sale.

Thanks

[M-MTax · Accepted solution]

K-1 won't show distribution of assets but you can pass through losses to the benes on the final 1041.