Filing tax return after 2006 death of Mother with living trust?

Question

All my Mother's assets were in a revocable trust. I am the trustee of what is now an irrevocable trust with an EIN. Trust had $17,700 worth of interest and dividend income in 2006. I had planned to file the 1041 but even with a $600 exemption this yields a very high tax obligation: $2,596 plus 35% of amount over $10,050 = $5,064. Advice, please.

Answer 1

Yes, the trust tax rates are high. It is to discourage the creation of trusts.

First: when did she die? if it was in 2006 - a portion of that will be allocated to her final Form 1040

Second: were any distributions made from the trust post death? these distributions may carry out income to the receipents, reducing the taxable income to the trust. You missed the window to take a distribution w/in 65 days after the close of the year.

Third: Did you make a IRC 645 election on the trust? If not, you are using the wrong personal exemption (its not 600).

Fourth: If this trust has enough $ to generate 17000 of income in a year, I would consider getting professional advice. It might be worth it.

*****Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency*****

Fourth:

Answer 2

Distributions to beneficiaries are deductible on the 1041 and carry out distributable net income to the beneficiaries, who might be in a lower tax bracket. Were any distributions made to you and siblings?

Answer 3

in case you fairly comprehend you probably did not report, report. if you're no longer positive, call the IRS. if you're getting a refund, no huge deal as you in effortless words owe consequences and interest in case you owe. (absolutely the cut-off date for procuring a refund on 2006 taxes is to report by 4/15/2010 or 10/15/2010 in case you had an extension.)