Income Taxation Of Trusts And Estates - Simple / Complex Trusts

Simple/Complex Trusts

Simple Trust:

  • Trust that is required to distribute all of its annual income to the beneficiaries.
  • Beneficiaries cannot be charitable.
  • Income of the trust is taxable to the recipient, even if left in the trust to accumulate.
  • Not allowed to distribute corpus (principal).
  • Capital gains are considered part of the corpus.
Complex Trust (must have one of the following):

  • Retains current income in the trust.
  • Distributes corpus.
  • Distributions to charitable organizations.
*Both the Simple and Complex Trusts are given deductions for the income distributed to beneficiaries, and both trusts are granted the standard exemption amount of $100.*

Revocable / Irrevocable Trusts
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