Irrevocable Trust tax return question. Received a consolidated 1099 (DIV-INT). Grantor is still living. No distributions were made. How is this reported?

[tagteam · Accepted solution]

"How is this reported?"

Unless the trust is a grantor trust (essentially a trust where the trust assets are owned by the grantor and/or the grantor has complete control), the trust must file a Form 1041 if it has any taxable income for the tax year, gross income of $600 or more (regardless of taxable income), or a beneficiary who is a nonresident alien.

See https://www.irs.gov/instructions/i1041#idm139674713127392

[bb-pitcher58]

The account type is a Living Trust, my spouse is the trustee. The grantor, her mother is still living. There were no distributions from the trust in 2018. The account  has interest and dividends over $600. The 1099 was mailed to us, being that my spouse is designated trustee. My understanding is that there is no 1041 filing if the grantor is still living. Yes/No? If filing is required, does this fall upon the trustee and does the trust pay any tax consequences?

[tagteam]

If filing were required, then the trustee would be responsible for filing the 1041.

However, with a grantor trust, an optional method of reporting can be used that does not require filing a 1041.

See <a rel="nofollow" target="_blank" href="https://www.irs.gov/instructions/i1041#idm139674712735312">https://www.irs.gov/instructions/i1041#id...>