Need To File Trust Return?

Question

I am the administrative trustee of a an irrevocable trust, the sole income of which is rent on land owned by the trust via a 99 year lease. There are no expenses and all income is distributed to the beneficiaries -- my sister and I -- neither of whom would ever consider not reporting the income.

Other than the annual check, the trust receives no paperwork from the lessee regarding the rent payment.

For decades, I have filed identical annual returns consisting of Form

1041, Schedule E and K1s. This is hardly an onerous task, but one that I could do without. I am approaching the point where every half hour counts.

Is there a risk of consequences should I simply stop filing?

Bill Brown · Accepted Answer

Since no one else has responded, I'll opine.

There's always a risk.

On page 4 of the instructions for Form 1041 in the "Who Must File" section:

********* The fiduciary (or one of the joint fiduciaries) must file Form 1041 for a domestic trust taxable under section 641 that has:

Any taxable income for the tax year,
Gross income of 0 or more (regardless of taxable income), or
A beneficiary who is a nonresident alien.

*********

There is a $50 penalty for failure to provide a K-1 to a beneficiary. If that failure is willful, the penalty is $100 or 10% of the "aggregate amount to be reported," whichever is greater. (See page 9 of the instructions.) I do not believe that you can meet the K-1 requirement without filing a 1041.

William Brenner · Answer

Thanks, Bill.  I shall file.

Need To File Trust Return?

Join the Discussion

Didn't find your answer?