[WSBAPT] Basic Questions re Trust Distributions

Tue Aug 29 12:14:17 PDT 2023

Phil,

I think it’s time that I jump on board and request a copy of your book.  Please remind me (and others who wish to order) – to whom should the check be made payable?  Do you have an assistant or paralegal we should send the payment to?

Thank you,

[uc%3fexport=download&id=1W3rEcChy0_E0cCfV5up02mkhwnL6eWIs&revid=0B4P5JoIHdbFaR29EbHlRWHFseFV5STZpSUVGeUNPWldkVDFVPQ]
Inge A. Fordham | Attorney
Fordham Law, PLLC
3218 Sixth Avenue | Tacoma, WA 98406
Office: (253) 348-2657 | Mobile: (206) 778-3131
www.fordhamlegal.com<http://www.fordhamlegal.com>

Confidential Communication: This email is sent to a recipient on behalf of an attorney/law firm, and is information intended exclusively for the individual, entity or company to which it is sent.  This communication may contain proprietary, privileged or confidential information or may otherwise be legally exempt from disclosure other than to the intended recipient.  If you are not the named addressee, you are not authorized to read, print, retain, copy or otherwise disseminate this message or any part of it.  If you have received this email in error, please notify the sender immediately by email or other communication and delete all copies of the message.

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> on behalf of Philip N. Jones <pjones at duffykekel.com>
Date: Tuesday, August 29, 2023 at 11:50 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Basic Questions re Trust Distributions
Diane is correct.
For a much longer answer, send me $25 and I will send you my book on fiduciary income tax, with both Oregon and Washington references in it.
A few dozen of you on the Washington listserv have purchased copies.  You can weigh in on whether it is a good deal, a bad deal, or a mediocre deal.
Limited time offer:  I retire at the end of the year.  I have not yet decided whether I will keep my book up-to-date after that.
Phil Jones

Philip N. Jones
Duffy Kekel LLP
900 S.W. Fifth Ave. Suite 2500
Portland, OR 97204
pjones at duffykekel.com<mailto:pjones at duffykekel.com>
(503) 226-1371 – office
(503) 853-1482 – cell
(503) 226-3574 - fax

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Diane J. Kiepe
Sent: Tuesday, August 29, 2023 11:28 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Basic Questions re Trust Distributions

Oh Mark,

Trust Taxation is its own animal and I would run, not walk,  to take tax matters to a well versed 1041 preparer.  I do some but only simple ones.  Distributions may or may not be taxable – there is a tiering system – but for Simple Trusts, income is taxed to the distributee, for Complex Trusts certain distributions are also taxed.  By way of example only, interest income distributed to a bene will be taxed as income, a distribution of corpus will not.  Simple Trust get really crazy and there is authority that the income is taxed to bene whether or not distributed.  See attached and below – many don’t know this and I would bet some of those include IRS folks.  There is also a bit of a twist for taxable year – something called the 65 day rule – I use it every year.  Distributions made in the first 65 days can be deemed to have been distributed on 12/31 of year prior.  This really can save a trust with even moderate income given the hypertaxation of trusts.

A 1041 is a blend of 1040 and a 1065 in my opinion.  Trust is reporting entity and may or may not have a tax liability (depends on trust terms (Simple vs Complex) and of course distributions made and their source).

I.R.C. § 652(a) Inclusion —
Subject to subsection (b), the amount of income for the taxable year required to be distributed currently by a trust described in section 651 shall be included in the gross income of the beneficiaries to whom the income is required to be distributed, whether distributed or not. If such amount exceeds the distributable net income, there shall be included in the gross income of each beneficiary an amount which bears the same ratio to distributable net income as the amount of income required to be distributed to such beneficiary bears to the amount of income required to be distributed to all beneficiaries.
I.R.C. § 652(b) Character Of Amounts —
The amounts specified in subsection (a) shall have the same character in the hands of the beneficiary as in the hands of the trust. For this purpose, the amounts shall be treated as consisting of the same proportion of each class of items entering into the computation of distributable net income of the trust as the total of each class bears to the total distributable net income of the trust, unless the terms of the trust specifically allocate different classes of income to different beneficiaries. In the application of the preceding sentence, the items of deduction entering into the computation of distributable net income shall be allocated among the items of distributable net income in accordance with regulations prescribed by the Secretary.
I.R.C. § 652(c) Different Taxable Years —
If the taxable year of a beneficiary is different from that of the trust, the amount which the beneficiary is required to include in gross income in accordance with the provisions of this section shall be based upon the amount of income of the trust for any taxable year or years of the trust ending within or with his taxable year.
(Aug. 16, 1954, ch. 736, 68A Stat. 219; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834.)
BACKGROUND NOTES
AMENDMENTS
1976--Subsec. (b). Pub. L. 94-455 struck out “or his delegate" after “Secretary”.

Hope this helps.

Diane J. Kiepe
Douglas Eden, P.S.
717 W. Sprague Ave., Suite 1500
Spokane, WA  99201
djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>
509-455-5300

KINDLY ALLOW 2-4 WORKING DAYS TO RECEIVE A RESPONSE TO NON-URGENT EMAILS.  FEEL FREE TO SEND YOUR EMAIL (OR RESEND YOUR EMAIL AS THE CASE MAY BE) MARKED URGENT IN THE SUBJECT LINE.

DISCLAIMER: the preceding message and any attachments may contain confidential information protected by law, the attorney-client privilege or other privilege.  This communication is intended to be private and may not be recorded or copied without the consent of the author.  If you believe this message has been sent in error, REPLY to sender and then DELETE this message.  Thank you.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Mark Anderson
Sent: Tuesday, August 29, 2023 11:02 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Basic Questions re Trust Distributions

Trustee is required to make periodic distributions to a beneficiary.  Are the distributions taxable?  Is the Trustee required to withhold any amount from this distribution for federal taxes?

Thanks.

Mark B. Anderson
ANDERSON LAW FIRM PLLC
821 Dock St  Ste 209  PMB 4-12
Tacoma, Washington 98402
+1 253-327-1750
+1 253-327-1751 (fax)
marka at mbaesq.com<mailto:marka at mbaesq.com>
www.mbaesq.com<http://www.mbaesq.com/>
CONFIDENTIALITY NOTICE
This transmission is confidential and is intended solely for the use of the individual named recipient. It may be protected by the attorney-client privilege, work product doctrine, or other confidentiality protection. If you are not the intended recipient, or the person responsible to deliver it to the intended recipient, be advised that any dissemination, distribution, or copying of this communication is prohibited. If you have received this transmission in error, please immediately notify the sender via e-mail or by telephone at (253) 327-1750 that you have received the message in error, and then delete it. Thank
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20230829/12a1d52a/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 358107 bytes
Desc: image001.png
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20230829/12a1d52a/image001.png>