Estates and Gift

Question 1

How is income in a trust taxed

Answer 1

Income earned by a trust that is distributed to the income beneficiary, such as dividends and interest, is taxed to the income beneficiary

Question 1

What is a simple trust

Answer 1

A simple trust is a trust that:
* Distributes all of its income each year where the annual distribution is exactly equal to Distributable Net Income.
* Is not allowed to make charitable contributions.

A simple trust must distribute its entire distributable net income currently and not the corpus. There is no requirement of a cash method of accounting for a simple trust.