After taking up this article, we move further into discussing the taxation of trusts.
Revocable Trust
When a revocable trust is created, the grantor can regain title to any part of the trust's corpus in any of the following cases:
1.) The grantor alone or in conjunction with any person who doesn't have a substantial adverse interest in the disposition of the corpus or its income
2.) Anyone who doesn't have a substantial adverse interest in the disposition of the corpus or its income
The trustee/fiduciary is the one who files the return and pays the tax for the trust. The gross income of the trust is the same as an individual taxpayer's. Because of this, the trust is subject to the following deductible expenses:
1.) An individual's deductible expenses
2.) Income of the trust distributed to the beneficiaries
3.) Income collected by the guardian of an infant (held/distributed in accordance with the orders of the court)
The personal exemption of a trust has the same issue as that of an estate's exemption. Ergo, the exemption of Php20,000, as my teacher says, should be Php50,000. Also, a trust's accounting period is the same as an individual taxpayer's.
When the same grantor creates 2 or more trusts in favor of the same beneficiary, the exemption is deducted from the total income of the trusts and the trustees of each trust proportionally bear the taxes. If 2 persons create 2 separate trusts for the same beneficiary, both trusts will be taxed separately and each will be entitled to its own deductions.
The trustee/fiduciary is the one who files the return and pays the tax for the trust. The gross income of the trust is the same as an individual taxpayer's. Because of this, the trust is subject to the following deductible expenses:
1.) An individual's deductible expenses
2.) Income of the trust distributed to the beneficiaries
3.) Income collected by the guardian of an infant (held/distributed in accordance with the orders of the court)
The personal exemption of a trust has the same issue as that of an estate's exemption. Ergo, the exemption of Php20,000, as my teacher says, should be Php50,000. Also, a trust's accounting period is the same as an individual taxpayer's.
When the same grantor creates 2 or more trusts in favor of the same beneficiary, the exemption is deducted from the total income of the trusts and the trustees of each trust proportionally bear the taxes. If 2 persons create 2 separate trusts for the same beneficiary, both trusts will be taxed separately and each will be entitled to its own deductions.
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