I have a Trust return to file that was created in 2019. Assets were transferred to the Trust in 2019 and forms 1099 received are listed under the individual's Tax ID (SS#.) Two questions: 1) How will this work if the IRS is in receipt of 1099's under individuals' name and social (will it create confusion and a big mess to straighten out with the IRS); and 2) Do I need to break out the income allocated to portion of the year before the Trust was created, allocating part to a form 1040 before the trust was created,and the rest to the form 1041. It's an irrevocable trust, and the individual mentioned is the primary beneficiary.
I appreciate any advice on one or both of the questions above. Thanks in advance.
John Horton, CPA
2) Yes, apportionment based on the period owned by the individual(1040) and trust 1041. I always report on the 1040 in this case because of the 1099s and then nominee out to the trust. Then 100% is reported for the IRS, but backed out.
Tell holder of the assets to fix it and use the EIN.
I have to ask, really a completed gift, truly irrevocable, assets out of the estate, IDGT, or something else?
From your comments it appears that the grantor, (trustee?) and primary beneficiary are one and the same. Thus, if you haven't, would highly recommend scrutinizing the trust agreement and related documents. After all, we'd all love to get rid of our taxable income.