Return for a special needs trust

[schirallicpa]

I'm not sure if this is a dumb question or if I just need to go home and go to bed.

This year is the initial return showing a loss.  But - do I need a K1?  And does the K1 go to the child that the trust is for?  Or is it the trustee who is handling the trust for him?  

 

[michaelmars]

USUALLY THE trust pays any taxes and no K1 is needed.

[DANRVAN]

4 hours ago, schirallicpa said:

showing a loss.  But - do I need a K1? 

There would be a K-1 if taxable income was distributed.

[Abby Normal]

K1 always goes to the beneficiary. Payments of nondeductible expenses are considered distributions to the beneficiary.

But if you have a loss, there will be no numbers on the K1.

[schirallicpa]

This tax season has been taxing -

Thank you guys!

 

[Catherine]

Payments of nondeductible expenses are considered distributions to the beneficiary, but need not be from income. Could be from corpus; depends on trust document. IIRC, distributions of corpus don't get listed on a K-1. Please correct me if my memory is faulty!

[DANRVAN]

2 hours ago, Catherine said:

, distributions of corpus don't get listed on a K-1

Correct.  Only distributions of taxable income.  Trust takes income distribution deduction for same amount.

[Catherine]

Thanks, @DANRVAN for confirming that in this instance my memory was not faulty.