Q. Would it be difficult to get a Corporate Trustee to disclose the 1041 trust return and 1099s that they relied on to file?
Issue
K-1 disclosures that the Trustee provides to the beneficiary doesn't contain adequate information to correctly calculate the beneficiary's tax liability (I believe).
Example
Consider a portfolio of Total Market and Intermediate Treasury funds. While the K-1 will report how much of the income is distributed to beneficiary, it won't disclose anything about how much of the reported ordinary dividends are treasury obligations that are free from state tax.
Holding individual treasuries wouldn't help either as the beneficiary wouldn't know if the reported 'interest' were bond interest or bank interest or CD interest or whether it was state taxable or not.
Discussion
Am I wrong? Can you tell from a K-1 how much of the dividends are free from state taxation? I can't and without the 1099s used to create the 1041, can't figure it out. Can I?
I believe the Trustee should have a fiduciary responsibility to disclose the information necessary for the beneficiary to accurately do their taxes, but I can't put the beneficiary at risk of not having a trustee.
Workaround
What about (edited):
1) Looking at the 1041 and K-1
BENFICIARY DIV / TRUST DIV = % ISSUED TO BENEFICIARY
2) Lookin at the 1099-DIVs
$$ GOV OBLIGATION for TRUST * % ISSUED TO BENEFICIARY
Does this make sense?
[now if I can arrange to get that info from the trustee to pass to the beneficiary or trust advisor, and get the trust advisor to understand and inform the person actually doing taxes for the special needs beneficiary who isn't going to explain any of it ... sign convoluted mess]
Helpful suggestions (specify corporates only in trust documents - just pay what you don't owe - etc etc) are welcome.
Issue
K-1 disclosures that the Trustee provides to the beneficiary doesn't contain adequate information to correctly calculate the beneficiary's tax liability (I believe).
Example
Consider a portfolio of Total Market and Intermediate Treasury funds. While the K-1 will report how much of the income is distributed to beneficiary, it won't disclose anything about how much of the reported ordinary dividends are treasury obligations that are free from state tax.
Holding individual treasuries wouldn't help either as the beneficiary wouldn't know if the reported 'interest' were bond interest or bank interest or CD interest or whether it was state taxable or not.
Discussion
Am I wrong? Can you tell from a K-1 how much of the dividends are free from state taxation? I can't and without the 1099s used to create the 1041, can't figure it out. Can I?
I believe the Trustee should have a fiduciary responsibility to disclose the information necessary for the beneficiary to accurately do their taxes, but I can't put the beneficiary at risk of not having a trustee.
Workaround
What about (edited):
1) Looking at the 1041 and K-1
BENFICIARY DIV / TRUST DIV = % ISSUED TO BENEFICIARY
2) Lookin at the 1099-DIVs
$$ GOV OBLIGATION for TRUST * % ISSUED TO BENEFICIARY
Does this make sense?
[now if I can arrange to get that info from the trustee to pass to the beneficiary or trust advisor, and get the trust advisor to understand and inform the person actually doing taxes for the special needs beneficiary who isn't going to explain any of it ... sign convoluted mess]
Helpful suggestions (specify corporates only in trust documents - just pay what you don't owe - etc etc) are welcome.
Statistics: Posted by typical.investor — Thu Feb 15, 2024 9:25 pm — Replies 4 — Views 296