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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > Trust income
Expert: John Kirk, CPA
Date: 9/28/2008
Subject: Trust income
Question
I am trustee for a trust that distributes income as needed. There are two properties-one on the market and one the primary beneficiary is living in. There are also stocks. Some smaller stocks will need to be sold in the future to pay expenses on the homes-insurance, taxes, repairs. There is virtually no cash available until the home on the market sells. When some of the stocks are sold I understand the proceeds are long term capital gains. But if the money is used for the properties and it is not "distributed" is it taxed as assets held? What about when the house sells and some of the income is held for expenses on the trust property? I read insurance etc is not deductible if it is not a rental-which it is not since the beneficiary is living in it.
Answer
The sale of the property which results in capital gain is taxed to the trust, since income is not required to be distributed. None of the expenses on the property would be considered deductible if the property is not rental.
Hope this answers your questions
John Kirk, CPA
www.johnkirkcpa.com
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