Article On Grantor Trust Tax Reporting

Christopher J.C. Jones (Moore & Van Allen) & Caitlin N. Horne (Moore & Van Allen) recently published an article entitled, Grantor Trust Income Tax Reporting Requirements, 30 Prob. & Prop. 40-43. Provided below is an excerpt from the article:

What is a grantor trust? The most common form of a grantor trust is a revocable trust funded by the grantor during his or her lifetime. Grantor trust, however, can arise in a number of common planning techniques including irrevocable life insurance trusts, intentionally defective grantor trusts, and grantor retained annuity trust. A grantor trust is a trust to which at least one of the provisions of IRC §§ 671-679 applies. If any of IRC §§ 671-677 or 679 applies, then the “grantor” is required to include all item’s of the trust’s income, deduction, and credit on his or her personal income tax return. If IRC § 678 applies and a beneficiary is deemed to be the grantor of the trust for income tax purposes, that beneficiary must similarly report the items taxed to the trust on his or her personal income tax return. The goal of this article is to provide a primer on grantor trust income tax reporting. This article will not delve into the ways to create a grantor trust but will assume that the advisor has already made a determination that the trust in question is a grantor trust.