I am aware that if a trust has any taxable income or $600 in gross income, a Form 1041 must be filed for the trust each year.
My question is, if a trust is the beneficiary of a life insurance policy, and the grantor of the trust pays the life insurance premiums every year as gifts to the trust, are these gifts considered part of the trust's "gross income" that must be reported on the 1041?
I have a client with a life insurance trust that is the beneficiary of the policy. He will be paying the life insurance premiums to the trust every year and they may total more than $600. Can he call these premiums a gift, and if so, are they considered part of the trust's gross income?
Chris Johnson, EA
- posted 6 years ago