A. Type of Entity
Check the appropriate box(es) that describes the entity for which you are filing the return.
In some cases, more than one box is checked. Check all boxes that apply to your trust. For example, if only a portion of a trust is a grantor type trust or if only a portion of an electing small business trust is the S portion, then more than one box is checked.
Determination of entity status is made on an annual basis.
An estate of a deceased person is a taxable entity separate from the decedent. It generally continues to exist until the final distribution of the assets of the estate is made to the heirs and other beneficiaries. The income earned from the property of the estate during the period of administration or settlement must be accounted for and reported by the estate.
A trust may qualify as a simple trust if:
The trust instrument requires that all income must be distributed currently;
The trust instrument does not provide that any amounts are to be paid, permanently set aside, or used for charitable purposes; and
The trust does not distribute amounts allocated to the corpus of the trust.
A complex trust is any trust that does not qualify as a simple trust as explained above.
A qualified disability trust is any nongrantor trust:
Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and established solely for the benefit of an individual under 65 years of age who is disabled, and
All the beneficiaries of which are determined by the Commissioner of Social Security to have been disabled for some part of the tax year within the meaning of 42 U.S.C. 1382c(a)(3).
A trust will not fail to meet item 2 above just because the trust's corpus may revert to a person who is not disabled after the trust ceases to have any disabled beneficiaries.
The S portion of an ESBT is the portion of the trust that consists of S corporation stock and that is not treated as owned by the grantor or another person. See Electing Small Business Trusts (ESBTs), earlier, for more information about an ESBT.
A grantor type trust is a legal trust under applicable state law that is not recognized as a separate taxable entity for income tax purposes because the grantor or other substantial owners have not relinquished complete dominion and control over the trust.
Generally, for transfers made in trust after March 1, 1986, the grantor is treated as the owner of any portion of a trust in which he or she has a reversionary interest in either the income or corpus therefrom, if, as of the inception of that portion of the trust, the value of the reversionary interest is more than 5% of the value of that portion. Also, the grantor is treated as holding any power or interest that was held by either the grantor's spouse at the time that the power or interest was created or who became the grantor's spouse after the creation of that power or interest. See Grantor Type Trusts, earlier, for more information.
A chapter 7 or 11 bankruptcy estate is a separate and distinct taxable entity from the individual debtor for federal income tax purposes. See Bankruptcy Estates, earlier.
For more information, see section 1398 and Pub. 908, Bankruptcy Tax Guide.
A pooled income fund is a split-interest trust with a remainder interest for a public charity and a life income interest retained by the donor or for another person. The property is held in a pool with other pooled income fund property and does not include any tax-exempt securities. The income for a retained life interest is figured using the yearly rate of return earned by the trust. See section 642(c) and the related regulations for more information.