In 2014, Leon Lopez funded Lopez Trust #3, an irrevocable trust, at First Bank, 125 Seaview, Northwest
Question:
In 2014, Leon Lopez funded Lopez Trust #3, an irrevocable trust, at First Bank, 125 Seaview, Northwest City, WA 98112, for the benefit of his twin children, Loretta and Jorge. The trust's tax ID number is 74-1243565. The trustee, in its discretion, is to distribute income and/or principal to one or both of the beneficiaries and does not need to maintain separate shares. The trust is to terminate in 2025, when the beneficiaries reach age 35. Leon transferred corporate bonds and municipal bonds to the trust in January 2014. In 2017, the trustee distributed $8,600 to Loretta (whose address is 123 Maple Ave., Northwest City, WA 98115) and nothing to Jorge. Half of the trustee's fee is to be charged to income and half to principal; gains and losses affect principal. Other current year information for the trust is as follows:
Interest from corporate bonds.................................................$9,200
Interest from municipal bonds................................................. 6,800
Short-term capital gain on sale of bonds...................................300
CPA's fee for preparation of prior year's tax return..................525
Trustee's fee ..................................................................................800
Estimated federal income taxes paid from principal..............2,400
Prepare a Form 1041 and Schedule K-1 for the trust. Ignore the alternative minimum tax.
Step by Step Answer:
Global Taxation How Modern Taxes Conquered The World
ISBN: 9780192897572
1st Edition
Authors: Philipp Genschel, Laura Seelkopf