Lucho Posted June 24, 2008 Report Posted June 24, 2008 Would someone please explain to me in simple words the meaning of Tier 1 and Tier 2 distributions that is shown on the Beneficiariy's Imput Sheet Sch. K1, Form 1041. When I look in the dictionary I get more confused. I am studying to have some knowledge that can help me next year; I am using the program to complete a sample trust return and even though everyting else is going well, I still need to understand in the practice what is Tier 1 and Tier2. As always, I thank you in advance and may God continue blessing this forum. Have all of you a wonderful day. Quote
zeke Posted June 24, 2008 Report Posted June 24, 2008 Lucho - You ask a good question. I too await the learned answer undoubtedly near. I respond to make a presonal remark. I have high regard for your determination to become informed on the convoluted inanity of the IRC - in apparently your second language! Hang in there!! Zeke Quote
Lucho Posted June 24, 2008 Author Report Posted June 24, 2008 Lucho - You ask a good question. I too await the learned answer undoubtedly near. I respond to make a presonal remark. I have high regard for your determination to become informed on the convoluted inanity of the IRC - in apparently your second language! Hang in there!! Zeke Thank you very much. I will be back this evening (I am leaving right now to my regular job) Quote
RoyDaleOne Posted June 24, 2008 Report Posted June 24, 2008 Tier 1 amounts of income required to be distributed currently if payable out of either income or principal to the extend paid out of income. Tier 1 distributions less than or equal to DNI can be comprised of 100% taxable income. Tier 2 amounts (those other than Tier 1 and specific bequests IRC 663(a)) which are paid, credited, or required to be distributed. Tier 2 distributions are taxable income to the extent DNI exceeds the Tier 1 distributions. IRC 661 IRC 662 The IDD can not exceed DNI. Quote
zeke Posted June 24, 2008 Report Posted June 24, 2008 Thanks RoyDaleOne. I learned something today! :D Quote
Lucho Posted June 25, 2008 Author Report Posted June 25, 2008 Tier 1 amounts of income required to be distributed currently if payable out of either income or principal to the extend paid out of income. Tier 1 distributions less than or equal to DNI can be comprised of 100% taxable income. Tier 2 amounts (those other than Tier 1 and specific bequests IRC 663(a)) which are paid, credited, or required to be distributed. Tier 2 distributions are taxable income to the extent DNI exceeds the Tier 1 distributions. IRC 661 IRC 662 The IDD can not exceed DNI. Thank you RoyDaleOne. I appreciate your help. Quote
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