Trust pays tax on final return

[joantax]

The trustee wants to pay the tax from the trust account without K-1's.  Program generates diagnostic saying needs beneficiaries percentages because of capital gain.  HELP.  I just want to e-file and let the trust pay the tax on the final return.

[George4Tacks]

Is this a simple trust or a complex trust?

[joantax]

complex. Profit.  The diagnostic won't let me file unless I pass through income to beneficiaries.

[sjrcpa · Accepted solution]

Because that's the way it's supposed to be done on a final return.

How about the trust makes estimated tax payments for each of the beneficiaries? This will be treated as distributions and then trust distributes the rest of the cash, after paying you.

[Accountant-Man]

<<let the trust pay the tax on the final return.>> This is not allowed.

Besides, trusts typically pay tax at a higher rate than individuals. Why would the trustee want to pay more tax?

[BobKamman]

@Accountant-Man  Because the trustee didn't know and didn't ask, and the beneficiaries have already spent the money.  Happens all the time, and with increasing frequency now that there have been so many trust promoters for so long.  

[Accountant-Man]

Does the trust have any money left?

[BobKamman]

How else would the trustee be paying the taxes?  Out of his own pocket? But then, how is this a final return if there is money left?  Lots of people out there selling trusts; not so many selling information on tax consequences. 

[joantax]

Plenty of money left.  But Lacerte won't let the Trust pay the tax because of final return.