Helen Shaggaggy

by | Aug 22, 2021 | Assignment Help

The Helen Shaggaggy Irrevocable Trust is a calendar year, cash basis taxpayer (EIN: 11-321654). The trust was created under the last will and testament of Helen Shaggaggy, who died on November 11, 2009. For the 2018 tax year, the MSIT’s books and records reflect the following transactions:Receipts            Dividends (qualified)                                                              $30,000            Gross Rents                                                                               25,000            Interest                Bonds with the City of Troy                                                 25,000                U.S. Series HH government bonds                                       20,000Capital Gains            RLD, Incorporated stock received from the Estate of Helen Shaggaggy                Sale price – 12/2/2018                                $48,000                Less: Basis (FMV on 11/11/2009)              <30,000>         18,000Disbursements            Trustee commissions (50% paid from income, 50%                        paid from principal)                                                        5,300            Legal Fees                                                                                 28,800            Contribution – Michigan Humane Society (paid from                        principal)                                                                       12,000            Depreciation – rental property                                                    2,000            Real estate tax – rental property                                                 4,000            Repairs and Maintenance – rental property                                4,200            Tax return preparation fee                                                             500            Federal quarterly estimated tax payments                                  9,000The legal fee was a legitimate trust expense incurred because of the choice of trust form.  The Trustee allocated the legal fee to the various income classes as follows:            Dividends                                                                                $         0            Taxable interest                                                                         16,000            Tax-exempt interest                                                                    6,000            Rents                                                                                           6,800                        Total Legal Fee:                                                          $28,800The propriety of the legal fee allocation is NOT in question.  The rental property is a commercial building located at 111 Lloyd Avenue, Troy, Michigan 48098.  Under the terms of the trust instrument (i.e. Helen Shaggaggy’s will), the $2,000 depreciation reserve equals the available tax depreciation deduction for the year. The trust instrument also specifies that all capital gains are allocable to principal and that the trustee has the discretion as to the amount of trust income distributed to William Shaggaggy, the sole individual beneficiary, as well as the charities specified in Ms. Shaggaggy’s will.  During 2018, the trustee distributed $24,000 of income to William and $12,000 to the Humane Socierty.Please prepare the 2018 Form 1041 and any other form or schedule required for the HSIT Trust.”Trustee”                                                         “Beneficiary”Harry Bank and Trust                                     William H. Shaggaggy3232 Mack Avenue                                         8675 Jenny LaneDetroit, MI 48041                                           Troy, MI 48007EIN: 82-3242424                                            SS#: 222-33-4444

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