Charitable Remainder Trust

[TaxmannEA]

I'm having a brain lock on this one. Taxpayer created a charitable remainder trust under Sec 664 in 1990. She died in 2007. All the assets in the trust were liquidated and given to a college and a church as per the trust document in 2007. The trust had about $4K in income in 2007. I believe that I need to file a 1041 for the trust, but there won't be any income shown on K-1's as all the income was given to the charitable institutions and a charitable deduction is taken on schedule A. Am I on the right track? This is the first one of these that I've had that totally distributed to exempt organizations.

[Margaret CPA in OH]

This is a good question but I don't understand why a 1041 would be filed and not just a final 5227. Since the purpose of a CRUT is to eventually distribute all assets to the charitable orgs listed in the trust document, I don't see a problem. I am preparing returns for 2 and at least one will end with donor's death within a couple of years (they are 94 and 95) so will be interested in seeing what you think should be done besides the final 5227.

[TaxmannEA]

Thanks! You jolted my brain into gear. I was hung up on the fact that this trust had been treated as a Grantor trust in the past. I was not presented with the trust instrument until after the death of the taxpayer, so I was relying on the word of the TP's daughter. This has been running for the last 18 years and no return has ever been filed on it. Income was included in TP's income as per a revokable trust. I think that I have my summer screw-up project for this year.

Any suggestions?

[Margaret CPA in OH]

I have a few suggestions but think that a phone conversation would be more efficient. Please check my website and call, if you like, to discuss. Champion-CPA.com or email at [email protected].

This year I have a second mishandled, misreported CRUT that remains incompletely resolved as the TP involved is foot-dragging. Another one took about 3 years with several IRS visits to straighten out.