In 2001, Belinda Barclay established the Barclay Trust, an irrevocable trust, and named as trustee Local Bank, 1234 Main Street, Gouldsboro, PA 18424. She funded the trust with corporate and municipal bonds. The trustee is directed to the distribute income and/or principle at it discretion to Belinda's adult son , Anthony Barclay (421-78-0443) and Patrick Barclay (421-78-0445), for 15 years and then to pay out the remaining trust assets, including any accumulated income, equally between the two sons. The Tax ID number for the trust is 74-543127. Half of the trustee's fee is charged to principal and half to income. During the current year, the trustee distributed $12,400 to Anthony, who resides at 31 Crimson COver, Tuscaloosa, AL 35487, and nothing to Patrick.
Other current year information for the trust is as follows :
Corporate bond interest $17,000
Municipal bond interest 19,000
Long term capital gain on sale of corporate bonds 2,200
CPA's fee for prior year's tax return 800
Trustee's fee 1,500
Estimated federal income tax paid 3,700
The trustee has a $700 short term capital loss carryover from prior year. Prepare a Form 1041, and any needed Schedule K-1 for Barclay Trust. Ignore the alternative minimum tax . The bond are not private activity bonds. Attach schedule to show your calculation. Be sure to include all required return information (Schedule B and G, Schedule D (1041), schedule K-1 (1041), DNI, allocation of DNI)
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