Who is responsible to pay the income tax on trust income

Reference no: EM133354075

Question: On January 1, 2021 Matthew establishes an irrevocable trust by transferring $1 million of marketable securities into said trust for the benefit of his two sons, Mark and Luke. Each son has an equal and separate share of the trust. Matthew's brother, John, is the Trustee. Matthew retains the powers to substitute or exchange assets of equal value within the trust and the power to borrow from the trust without providing adequate security. Each year, fifty percent of the trust income is paid in equal shares to Mark and Luke. The other 50% is added to the trust principal. The Trustee may distribute principal to Mark and Luke for health, education, support and maintenance. Upon Mark and Luke's death any remaining principal stays in trust for Mark and Luke's children (Matthew's grandchildren), per stirpes. In its first year, ending 12/31/2021, the trust had taxable income of $100,000.
Who is responsible to pay the income tax on trust income in 2021 and why?
Provide an explanation and support your research, explanation and conclusions with primary authority from the tax law (IRC, Regulations, etc).

Reference no: EM133354075

Questions Cloud

Diversity and inclusion at davidson college : Is setting numbers for business at 30% the right way to address the issue of diversity and inclusion at Davidson college?

What is your opinion about incorporating the business going : what is your opinion about incorporating the business going forward? List at least two reasons for or against incorporating, and any change the S-corp status

What is the provincial tax payable before tax credits : What is the provincial tax payable before tax credits if the individual is a residence of Ontario in 2021 calendar year with the same taxable income of $88,500?

Supervisor noticed coworker burnout is high in your office : Your supervisor noticed coworker burnout is high in your office and there has been a lot of turnover lately.

Who is responsible to pay the income tax on trust income : Who is responsible to pay the income tax on trust income in 2021 and why? Provide an explanation and support your research, explanation and conclusions

Own bodies and desires and intimacies : Discuss RAFIKI (2018) in consideration of Ellerson's (2019) idea of the right of women to have power over their own bodies and desires and intimacies.

What are your thoughts about the lower qualified dividends : Do you favor the §199A QBI deduction? Particularly since there is an income limitation on the QBI deduction and no income limitation on the recently reduced

What is one good example of story-trouble with too much grit : What is one good example of the story, Trouble with Too Much Grit? Why would that be a good example?

Has a high paying job and has determined he could afford : Has a high paying job and has determined he could afford up to $3,300 per month Wants a sweet home to reward all his hard work; his dream home costs $550,000

User Account

All Pages