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Tax Planning/Taxes on Rec. Living Trust in ILLINOIS

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Question
Hi Owen,
My parents had a revocable living trust. Both of them have passed. I am a successor trustee. Some of the money is to be retained by the trust, and paid to my brother $1000.00 per month. The trust earned about $900.00 in interest last year. How do I go about figuring the income taxes for the trust? ALSO, some US savings bonds (that were in the trust) were transferred into his name. No taxes were paid on these bonds. Can these bonds be transferred back into the trust? and would there be any tax advantage by putting the bonds back in the trust?

Answer
Bob - I am not an expert on trusts, but I can tell you this -

1. You will need to file Form 1041 for the trust.
2. In order to properly select the correct type of trust, and thus determine whether taxes are due at the trust level or the beneficiary level, the entire trust document would have to be read by a competent preparer.

I suggest you find someone in your local area who specializes in the preparation of trust returns.  Only a select few preparers are familiar with the complexities of the preparation of a 1041.  I personally do not prepare 1041s.  A good place to start is to find an Enrolled Agent in your area.  

Visit http://www.naea.org for more information and a searchable database.

I hope this assists you.

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OWEN S. ARNOFF, EA

Expertise

As an Enrolled Agent, I am fully capable of providing tax advice as it relates to personal and business income taxes. Enrolled Agents are the only Federally licensed tax practitioners and are admitted to practice before all administrative functions of the IRS. My specialty is working with small business owners who file Schedule "C" and helping them to structure their business in such a way as to maximize as many tax advantages as possible. I also enjoy working with individuals who have both routine as well as complex tax situations. I prefer to concentrate on individuals and small business tax planning.

Experience

I have a 25 year background in financial services including tax, bookkeeping, insurance, real estate and securities. I was previously the Chief Financial Officer of a local and national franchise organization. I am currently semi-retired, but used to own (in partnership with another EA) an individual and small business financial engineering firm where I work with nearly 2,500 individuals and small business owners in nearly every state and almost every continent, assisting them in all aspects of their tax and financial well-being. I have prepared or reviewed more than 8,000 tax returns in my career.

Organizations
National Association of Tax Professionals

Publications
http://www.amazon.com/Owen-Arnoff/e/B00BLRIZNU/ref=ntt_dp_epwbk_2

Education/Credentials
Enrolled Agent, Admitted to Practice Before the IRS, Accredited Tax Preparer, Fellow of National Tax Practice Institute, Certified QuickBooks ProAdvisor (1999-2011), Sleeter Group Certified QuickBooks Consultant, Life & Disability Insurance Agent License (California, Texas, Maine), Real Estate Agent License (California); Many years of continuing education in all these fields.

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