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(2) the amount of his investment income as derived from his late
mother’s trust, see sec. 32(i).
Discussion3
For tax purposes, trusts are either “simple” or “complex”.
See sec. 1.651(a)-1, Income Tax Regs. In order to be a simple
trust, a trust must be required to distribute all income
currently. See secs. 1.651(a)-1, 1.652(a)-1, Income Tax Regs.
In contrast, a complex trust may distribute or accumulate income,
or pay or set aside income for charitable purposes. Secs.
1.651(a)-1, 1.661(a)-1, Income Tax Regs.
A simple trust acts as a conduit, with income flowing
through the trust to the beneficiary. Therefore, for income tax
purposes, a beneficiary of a simple trust is required to include
in the beneficiary’s income the trust’s income that is required
to be distributed to the beneficiary currently, whether the
trust’s income is actually distributed or not.4 Sec. 652(a);
sec. 1.652(a)-1, Income Tax Regs.
The record in the present case demonstrates that the Ruth
Irene Myers Irrevocable Trust was a simple trust. Sec. 651; sec.
1.651(a)-1, Income Tax Regs. Thus, all of the income that the
trust was required to distribute in 2001, i.e., $14,412, is
3 We decide the issue in this case without regard to the
burden of proof.
4 The conduit theory of trust taxation also instructs that
the income received by a beneficiary retains the same character
in the hands of the beneficiary as in the hands of the trust.
Sec. 652(b).
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Last modified: May 25, 2011