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we can't see the trust agreement. however, under the tax laws if you are both the grantor and beneficiary the trust is treated as a grantor trust which means all income and expenses pass through to the grantor. whether a grantor trust return needs to be filed depends on what Identification number was used to report the capital gain. if it was the trust a grantor trust needs to be filed. if not, then the transaction is reported on your 1040. even if not a grantor trust, the trust may allow the trustee to pass the capital gain through to the beneficary.
the tax rules for what is a grantor trust are spelled out in code sections 671-678
Under those rules, a grantor trust is any trust in which the grantor retains one or more of the following powers:
A trust will also be deemed to be a grantor trust under either of the following circumstances:
Thanks for the replies. Yes, the link to Cornell explained that it depends on some different things (including the verbiage in the 'governing instrument', local laws and the intent of the fiduciary). In my particular case, I have determined that any capital gains would be 'distributable net income' after thoroughly reading the trust document and its amendments.
May I suggest that the software in TurboTax Business be updated to ask those pertinent questions before making assumptions about the capital gains in a trust.
Thanks, again, for your help.... Roger F
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