Trust Taxation for Beneficiary Account Closure

Forum|Forum|3 months ago
April 5, 2026
2 replies
20 views

My client is part of a 3 beneficiary trust that closes once they reach age 35. My client has never received a K1 which implies the trust has been paying the taxes on any income/gains then distributing to the beneficiaries.

Now, in the year of the trust closing for 1 of the 3 beneficiaries the trust has sold assets to close 1 account. My client was given a 1099B with the final gains+dividends and told to report this on their tax return. The 1099B is issued to the Trust with the Trust's TAX ID (though the form does say FBO "my client" name).

Can someone explain if my client should be reporting the 1099B or the trust? I don't understand why my client would have to report this on their tax return. Unless this is a special Trust scenario.

ProSeries Professional

Skylane

Intuit Community Champion

i assume you’ve seen the trust document. I’d have a conversation with the trustee and/or the accountant who prepared the 1041.

If at first you don’t succeed…..find a workaround

BobKamman

Level 15

"My client was given ... and told ... "

Passive voice usually indicates a reluctance to tell us what we need to know to evaluate the situation. Who did the giving and telling? Is the trustee a family member or friend who has been clueless about tax responsibilities? Has you client been receiving annual distributions, with no K-1, while happily ignorant that the trust can't pay the tax if it distributed income? Does your client want to open Pandora's box just to find a can of worms?

P

parvitstaxAuthor

Level 6

I am receiving the instructions to claim the 1099B assigned to the Trust on personal taxes from the beneficiary who is repeating what the trust accountant has told them.
I have only been shown the estimated tax payments due from each beneficiary and portfolio summaries from the wealth manager but no 1041 or communication from the trust accountant.

It appears the trust is paying taxes on the income and then distributing funds in prior years (this method doesn't require a K1 to be issued from my understanding).

I will reach out to the trust accountant and trustee because I don't see how 1099B assigned to the trust ID can be passed off to the beneficiary without a K1.

BobKamman

Level 15

"estimated tax payments due from each beneficiary"

What alternate universe are they living in?

Are the payments for the beneficiary's 1040, or for the trust's 1041?

Sometimes a trustee will make part of a required income distribution in the form of an ES payment to cover the tax the beneficiary will owe when they report K-1 income. But that doesn't seem to be what's happening here.

Sounds like another case of "I don't care what the law says, I'm going to have the trust pay the tax (at higher rates) and just let the beneficiary keep the rest, so there is no K-1."

Is your client the first to reach 35? So the other two (probably siblings) are being screwed over for another few years?

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