![]() ![]() To figure this deduction, the fiduciary must complete Schedule B. A trust or decedent's estate is allowed an income distribution deduction for distributions to beneficiaries. Most deductions and credits allowed to individuals are also allowed to estates and trusts. See Grantor Type Trusts, later, under Special Reporting Instructions.Ī trust or decedent's estate figures its gross income in much the same manner as an individual. If the trust instrument contains certain provisions, then the person creating the trust (the grantor) is treated as the owner of the trust's assets. A trust may be created during an individual's life ( inter vivos) or at the time of his or her death under a will (testamentary). A decedent's estate comes into existence at the time of death of an individual. Income Taxation of Trusts and Decedents' EstatesĪ trust or a decedent's estate is a separate legal entity for federal tax purposes. For additional details about the timing of tax-exempt income related to forgiven PPP loans, see Rev. See the instructions for Other Information, Question 1, and Schedule K-1, Box 14-Other Information for PPP reporting instructions. 2021-48 permits trusts and estates to treat tax-exempt income resulting from the forgiveness of a PPP loan as received or accrued: (1) as, and to the extent that, eligible expenses are paid or incurred (2) when the trust or estate applies for forgiveness of the PPP loan or (3) when forgiveness of the PPP loan is granted. Trusts and estates report certain information related to PPP loans. For more information, see Form 941 and its instructions.įorgiveness of Paycheck Protection Program (PPP) Loans. The credit now applies to qualified wages paid before Octo(or, in the case of wages paid by an eligible employer which is a recovery startup business, before January 1, 2022). Recent legislation modified the applicability of the employee retention credit. These credits have been extended for qualified leave wages paid for leave taken after March 31, 2021, and before October 1, 2021. Qualified sick and family leave credits extended. See Section 1061 Reporting Guidance FAQs. Section 1061 recharacterizes certain long-term capital gains of applicable partnership interests held by an estate or trust as short-term capital gains. ![]() However, section 965 may still apply to certain estates and trusts (including the S portion of ESBTs) where a section 965(h) or section 965(i) election has been made. Section 965(a) inclusion amounts are not applicable for tax year 2021 and later years. 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts, for more information. However, farming losses arising in tax years beginning in 2021 or later may be carried back 2 years and carried forward indefinitely.įor special rules for NOLs arising in 2018, 2019 or 2020, see Pub. Generally, an NOL arising in a tax year beginning in 2021 or later may not be carried back and instead must be carried forward indefinitely. For tax year 2021, a qualified disability trust can claim an exemption of up to $4,300. ![]()
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