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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: Trust Income Tax Return Date: 4/3/1999 6:31 PM
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If all the 1998 income was not withdrawn from a simple trust, can the
remaining income be withdrawn in 1999 to avoid the simple trust
becoming a complex trust? The original trust document indicated that the
income could be retained in the trust if desired.
To be a simple trust it must require that all income be distributed currently. If the trust says it can be retained, it is a complex trust. PERIOD You cannot make a Simple Trust a Complex Trust by whim.
You have two choices. Leave the income in and pay Trust taxes on it, and if you ever take it out you have to complete a Schedule J (read it and see if you want to get involved with this); or consider that she was "credited" with it and allocate all the income to the beneficiary on her K-1 and take it out.

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