ENG2507. Form 1041 Training: Types of Trusts (Grantor, Simple, Complex), Basic Trust Concepts (TAI, DNI, TTI, IDD), and Elections (EST, TAX)

This session will review the basics of the income taxation of estates and trusts, reviewing the types of trusts (simple, complex and grantor); and explain how to calculate and the differences between trust accounting income (TAI), distributable net income (DNI), and taxable income (TI). In addition, the session will review how DNI is allocated between the entity and its beneficiaries, including a review of the tier system, the separate share rule, the 65-day rule, specific bequests, and the Section 643(e) election. Finally, if time allows, the session will include a review of the preparation of the tax return of a complex trust and how items are reported on the Form 1041.

Learning Objectives:

• Identify the unique system of income taxation of estates and trusts.
• Differentiate trust accounting income (TAI), distributable net income (DNI) and taxable income (TI).
• Identify how the distribution system works to allocate distributable net income between the entity and various beneficiaries.
• Identify how the income and expenses are reported on the Form 1041.