Our father had a revocable trust. When he passed away his revocable trust became an irrevocable trust. I am both the Trustee and the sole heir.
The trust is at an end and I have put the final distribution to me on TurboTax Business. When I look at the K-1, it doesn't include this distribution (only the interest which the trust made last year in box 1).
I answered yes to "Did the Trust make any distributions to its beneficiaries in 2022. It's already set up as 100% distribution from prior years. I added the additional distribution which represents the final assets distributed under Trust Accounting Income. I said yes, that the entire income was distributed (it was).
Is this correct? Doesn't the heir (me) need to pay taxes on that distribution and wouldn't that be from
the K-1? Did I enter it incorrectly?
Your K-1 is only going to show items of income, gain, deductions, and credits.
Distributions of trust corpus will not appear on your K-1.
@lilly54 wrote:
Isn't the final distribution of assets (in this case the monies left) income?
No, corpus, or the principal of the trust, is not income (as opposed to taxable interest, dividends, and the like that is earned from the principal).
Your K-1 is only going to show items of income, gain, deductions, and credits.
Distributions of trust corpus will not appear on your K-1.
Isn't the final distribution of assets (in this case the monies left) income? Don't I need to pay taxes on the distributed income on my personal taxes? If it's not on the K-1 where do I then enter it on my personal taxes (also in TurboTax --a different version)?
@lilly54 wrote:
Isn't the final distribution of assets (in this case the monies left) income?
No, corpus, or the principal of the trust, is not income (as opposed to taxable interest, dividends, and the like that is earned from the principal).
Wonderful. That's a nice little bonus from my Dad (albeit, I would have preferred him alive). Thank you!