Received 1099-NEC as Trustee

[FishOnAH]

I am the Trustee for my late grandmother's Revocable Trust.  I received a 1099-NEC as Trustee, as I do every year.  As the trustee I receive a payment to manage the trust as needed which include my time mostly, but also offsets cost needed to drive places, mail documents, postage etc.  When entering this 1099-NEC into TurboTax, I historically choose "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common)." If I choose the None of these apply to me, it wants me to create a Schedule C for a business.  Everything I have read indicates that my personal duties as Trustee do not constitute a business. 

Just looking for guidance/clarification/confirmation that choose "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common)." for this is accurate.

[RobertB4444]

For a trustee this is generally true.  Because it is usually a temporary thing.  Most trustees are in the process of shutting down the estates in their care and are working towards getting out of the trustee business.

Which may or may not apply to you.  If this trust is going to be open and running for an extended period then this is a job for you and you should treat it as such.  That means creating a schedule C and entering all of the expenses that go with your trustee work as deductions and paying self-employment tax and all of that.

@FishOnAH 

[tagteam]

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@FishOnAH wrote:

I am the Trustee for my late grandmother's Revocable Trust.  I received a 1099-NEC as Trustee, as I do every year.....

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This is most likely not going to be income subject to self-employment tax that you would report on Schedule C, but it will be dependent upon the amount you are paid as trustee as well as the duration (of time you expend and how long you are to remain trustee).

Further, the statements quoted above beg the question as to from whom you receive a 1099-NEC. Typically, the trustee manages the business, income, expenses, et al, of the trust, including bookkeeping and tax reporting so the tax reporting statements (e.g., 1099s) would be issued by the trustee (which would be you, in this instance).

[FishOnAH]

First off, than you taking the time to reply, I appreciate it.  So, to answer your question we have a CPA prepare the Trust's taxes each year.  The Trust, a legal entity with its own EIN issues a 1099-NEC to the Trustee for services rendered.  As to the duration the trust will be open, the deceased whose assets are in the trust, had some personal past tax liability (failure to file for a few years due to advanced age and health conditions) we are sorting out prior to liquidating remaining assets in the Trust.  We have prepared amended returns for prior years, IRS has accepted and there has been some back and forth in terms of liability, penalties and interested.  We submitted a request for abatement, they acknowledged the request, froze accruing interest and penalties and asked for more time to review.  It's been about 3 years since we got everything sorted.  The IRS continues to send letters about every 3 to 6 months asking for more time for them to review.  So, at this point, our CPA has advised us to wait 7 years from the date the last return was filed to close the Trust out.  So, there isn't a lot 'work' being done anymore.

[FishOnAH]

Thank you, I appreciate the clear and concise response.