One of the basic rules in fiduciary taxation is that the person or entity that receives the taxable income from the trust or estate is taxed on that income. The calculation of distributable net income (DNI) and the distribution deduction determine the amount of this taxable income. Therefore, when distributions are made that “carry out” DNI, the fiduciary entity operates as a conduit where the beneficiaries are taxed on the amounts reflected on the Schedule K-1 and the fiduciary entity receives a corresponding distribution deduction. We will explore the various distributions that are made to beneficiaries and their impact on the taxation of the entity.
• Identify Distributions Made to Beneficiaries
• Determine Types of Distributions Made • Recognize the Impact of Distribution on DNI & the Distribution Deduction
• Review Tax Impact of Special Distributions
• Calculating DNI & the Distribution Deduction
• Does the Distribution “Carrying Out” DNI?
• In-Kind Distributions & the Impact on the Distribution Deduction
• Depreciation and the Distribution of In-Kind Property
• Distributions that Result in “Kenan Gain”
• Funding a Pecuniary Bequest with Depreciated Property
• IRC Sec. 643(e)
Tax practitioners, accountants and financial professionals.
Form 1041 Advanced Workshop Part 2
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