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Form 1041 Fiduciary Return For Revocable Trust

peauff
Level 3

Client's wife has a revocable trust, created several years ago.  Trust has never filed a return, as it had no assets/income.  Upon her death in 2021, a life insurance annuity payment was issued to the trust, with a corresponding 1099-R.  Payment was comprised 100% of non-taxable employee contributions.  This amount was immediately withdrawn from the trust by the surviving spouse/trustee.  The trust had no reportable income in 2021.  Obtained guidance from the IRS that no prior year tax filings are required, however, form 1041 must be filed for 2021.  Filing a "final" return for the trust for 2021.  Since it is not a taxable distribution, does the withdrawal of funds from the trust by the remaining spouse/trusted need to be reported on the return?    

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