Tax professionals use the terms simple trust and complex trust when dealing with fiduciary arrangements. How does one know whether a trust is simple or complex? When is this determination made?
What will be an ideal response?
Under the rules of Subchapter J, a simple trust (1) must distribute its entire accounting income every year, (2) have no charitable beneficiaries, and (3) distribute no corpus.?A complex trust is one that is not a simple trust. The classification as simple or complex is made every year. Thus, every trust is classified as a complex trust in the year in which it terminates (because it distributes all of its corpus during that year).
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