We set up an irrevocable trust for a legal settlement for our minor child. The settlement fund is being invested in a Schwab brokerage account under the name of the trust. We received Form 1099 composite forms from Schwab for TY2019. Must I file 1041 for this minor trust? Netting all the dividends, interests and capital losses, there is about $2K income reported in the 1099 composite.
We have no intention of withdrawing from this trust brokerage account nor have intention to add or remove fund to it since it was opened. Thank you in advance for your help!
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Nongrantor trusts must file Form 1041 every tax year they have $600 or more in income or any taxable income.
You might want to seek legal counsel to confirm that there is not another manner in which this can be structured.
Nongrantor trusts must file Form 1041 every tax year they have $600 or more in income or any taxable income.
You might want to seek legal counsel to confirm that there is not another manner in which this can be structured.
To add more to this story, we never filed 1041 for this trust since it was created in mid December, 2017. there was realized capital loss of like $10K in TY2018. Should I be able to carryover the capital loss in TY2018 when I file for TY2019? This leads me to the next question, can I just mail in both 2018 and 2019 return? Thank you!
If you are filing a 2018 return (1041) for the trust and there was a net capital loss, then that net loss should be carried over to 2019; a nongrantor trust does not pass losses through to beneficiaries until termination and the trust files a final return.
You can mail the returns for both years but you should mail each separately.
I would still advise you to consult legal counsel and seek professional tax guidance.
@tagteam Thank you!
"a nongrantor trust does not pass losses through to beneficiaries until termination and the trust files a final return." Right! I am just trying to keep things as simple as possible, hence no plan to distribute any fund out of this trust. Our intention is to invest wisely and let it grow for our minor child before she comes to age.
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