Grantor Trust

[cientax]

I have a client that now has a grantor trust and has been issued a statement showing she has taxable income. They indicate on the statement that they are issuing this statement rather than a 1041 Sch-K1. The statement shows interest, royalties, lease bonus, and delay rental. also has the fees listed for expenses.

Am I correct to say that all income goes to the respeded lines on the return and not to flow through the Sch-E.? or does the lease bonus and delay rental go to the Sch-E?

And the fees for management are subject to 2% of AGI?

[Catherine]

I have a client that now has a grantor trust and has been issued a statement showing she has taxable income. They indicate on the statement that they are issuing this statement rather than a 1041 Sch-K1. The statement shows interest, royalties, lease bonus, and delay rental. also has the fees listed for expenses.

Am I correct to say that all income goes to the respeded lines on the return and not to flow through the Sch-E.? or does the lease bonus and delay rental go to the Sch-E?

And the fees for management are subject to 2% of AGI?

If your client is the sole grantor, is the trustee, and retains powers over the trust, then everything is reported on the 1040 as if the trust doesn't exist.

If there are multiple owners (except MFJ), a fiscal year, and other complications, then 1041's and 1099's and all the rest are required.

Catherine

[cientax]

Catherine,

If the statements are signed by a "Trust Officer", does this mean that he could be a trustee?

Also, this income/expenses are her share of a former trust for the year. There is no 1041 being filed that I know of.

Would you suggest that I get more information from the client???