Reference no: EM131569665
Problem - Bart Smith settled the Smith Children's Trust on September 30, 2012 (EIN: 45-1792583). In 2016, the Trust had items of income and expense as follows:
Amount Allocable to
Income Principal
Qualified Dividends $23,149
Ordinary Dividends 3,319
Rental income from house 21,250
Charitable Gift to Salvation Army 10,000
Tax-exempt interest 18,000
Rental expenses 3,575
Trustee's fee 850 $ 850
Fee for preparation of tax return 725
Capital gain on sale of stock 18,173
Distribution of income:
Frank 17,150
Sally 12,200
The trust agreement appointed Smalls Bank and Trust as its trustee with broad discretionary authority, including the Trustee's authority to distribute income to Frank and Sally during its 20-year term. The trustee has decided to allocate a portion of the estimated taxes to the beneficiaries this year. On July 1, 2032, the Trust will terminate and the assets will be distributed equally to Frank and Sally, irrespective of any distributions the beneficiaries received during the life of the Trust (i.e. separate shares are not maintained for Frank and Sally). The Trustee has never allocated any estimated tax payments to the beneficiaries and the Trust provides that capital gains are to be treated as "principal" by the Trustee.
Smalls Bank and Trust Frank Smith Sally Smith
189 24th St. 5241 Union 7152 Forest
Port Huron, MI 48007 Portsville, MI 48018 Livonia, MI 48054
EIN: 38-1212853 SS: 287-49-1715 SS: 287-48-2372
Please prepare the 2016 Form 1041 and any other form or schedule required for the Smith Children's Trust. This Return will be due on or before class June 15, 2017.