Generate a K1 for a trust when only principal was distributed

[cry-crackly0j]

I have a complex trust that I am the sole beneficiary of. The trust does not require any distributions (and none were given), but  I did withdraw principal this year.  The 1041 does not require the reporting of non-income (principal) distributions, but I believe still need a K1 for my personal taxes.  How do I generate that?

[M-MTax]

You don't need to file a 1041 when only principal (corpus) is distributed and no income is earned or gain realized.

[cry-crackly0j]

Unfortunately, I do need to fill out the 1041 because the trust had (a lot of) capitol gains on the principal that was sold.  The question is, do I need a K1 from the trust for my personal income taxes for the money I got from selling the funds in the trust?

[M-MTax]

Did you make a distribution? If so, then you would prepare the 1041 and issue a K-1 to yourself to report the gain on your 1040. Otherwise, the trust could pay any tax due, and your distribution would be tax-free (i.e. no K-1 needed).

[cry-crackly0j]

No, no distributions.  The trust didn't pay any taxes other than the capitol gains tax for which I am preparing the 1041, either though.

[cry-crackly0j]

From what I have read, the beneficiary does not have to pay income tax on principal distributions, so I don't need a K1?

[M-MTax · Accepted solution]

Correct