Question

Simple trust or Complex trust

Forum|Forum|2 years ago
April 11, 2024
1 reply
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My mother had a revocable trust. she was the grantor. She passed away in 2022 and now I am doing the taxes as successor trustee for 2023 which had income. The trust is irrevocable now and I have an EIN, but Turbo tax asks what type of trust it is. The trust documents say that the trust should pay the taxes, and not the beneficiaries. It appears in Turbo Tax business that the only way for the income to be taxed to the trust is to make it a complex trust. If I choose a simple trust it creates schedule K-1s for 2023 for both my brother and I. The income received in 2023 was put in a money market account and I haven't distributed anything yet, since I was expecting taxes would have to be paid so I would use that account to pay the taxes before distributing any money to my brother and I. The only other option is grantor trust but my mom was the grantor and she has passed away. Should I choose complex trust or simple trust? Mark

TurboTax Business Windows

A

Anonymous_

Complex trust in this case (income is not required to be distributed currently).

Any trust that is not a simple trust is a complex trust.

See https://www.irs.gov/instructions/i1041#en_US_2023_publink1000286059

A trust may qualify as a simple trust if:

The trust instrument requires that all income must be distributed currently;
The trust instrument doesn't provide that any amounts are to be paid, permanently set aside, or used for charitable purposes; and
The trust doesn't distribute amounts allocated to the corpus of the trust.

M

mloomer66Author

Ok I will choose complex trust. This gives me the option not to enter beneficiaries. When I chose simple trust it forced me to enter beneficiaries as it wouldn't let me choose zero. Thanks.