u/Rivet3

▲ 3 r/tax+2 crossposts

Layered Trust Distributions with $0 Income

I am looking for some information on tax filing for an irrevocable trust (referred to as Trust 1) that:

  1. received a distribution from another irrevocable trust's (referred to as Trust 2) corpus (i.e., principal),
  2. received no form of funding or income from other sources (including bank interest), and
  3. made a distribution to a beneficiary (referred to as Individual 1) using the funds received from Trust 2 corpus.

My understanding is that Trust 1 will not receive a Schedule K-1 from Trust 2, will not provide Individual 1 with a Schedule K-1, and will not be required to file a Form 1041 with the IRS. Is this understanding correct? Should Trust 1 file a Form 1041 and generate a Schedule K-1 (with $0 in every field) even without taxable income due to the distributions it received and made?

For reference, every entity is registered or lives in the state of Missouri.

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u/Rivet3 — 10 hours ago