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i am trustee of a trust for the benefit of my sister. the main asset of the trust is the house my sister lives in.

in 2011, the heater went as the result of a lightning strike. my sister paid to fix it, and i filed an insurance claim on behalf of the trust. as a result, the trust received a $7,000 insurance payment, which i deposited into the trust account. thereafter i cut my sister a check for the $7,000 she spent out of pocket.

what do i do with the $7,000 on the 1041 i am filing for the trust? is it income to the trust and a distribution to my sister? if not, what is it?

thanks in advance,

c.
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