Ordinarily, a foreign partnership, Foreign simple trust
, or foreign grantor trust is looked through for chapter 3 and chapter 61 purposes.
Figure F Transfer Method Used by All Donors, Taxable and Nontaxable, Gift Year 2008 Direct gifts 69.1% Family trusts  5.9% Simple trusts
3.9% Split-interest trusts  2.2% Qualified personal residence trusts 2.4% Other trust types  16.4%  "Family trusts" includes children's trusts and bypass trusts.
Many trusts, including simple trusts
and trusts that qualify for the estate and gift tax marital deduction, are required to distribute their income annually.
Are Not Simple When They Have Nonresident Alien Beneficiaries
(10) Of the Tax Year 2002 returns filed for complex and simple trusts
, 60.1 percent and 56.4 percent, respectively, are represented in the panel (Figure B).
Because simple trusts
, by definition, do not make charitable contributions, only complex trusts are addressed.
comprise a majority of trusts used for gifted assets.
Nearly 748,000 Forms 1041 were filed by simple trusts
in 2004, a slight increase from the approximately 747,000 filed in 2003.
Certain trusts, simple trusts
, pooled income funds, marital deduction trusts, qualified domestic trusts (QDOT), net income charitable trusts, grandfathered generation-skipping transfer (GST) trusts and qualified subchapter S trusts must determine the amount of income required to be distributed.
These changes will affect all simple trusts
, all complex trusts using trust income as a benchmark, and all qualified terminable interest property (QTIP) marital deduction trusts (1) in states that have adopted versions of the UPIA or (2) governed by the terms of a document that contains a power to adjust or a unitrust amount: They will also affect any charitable remainder unitrust (CRUT) in a state that has adopted a default unitrust definition of income (such as the New York proposal, before its recent amendment).(4) This article will analyze the proposed regulations and offer practical suggestions to trustees and their advisers.
In addition, complex trusts collectively reported the largest share of aggregate deductions, 38.7 percent, though the percentage of deductions attributable to simple trusts
, 37.7 percent, was similar.
As in the case of simple trusts
, beneficiaries of complex trusts and estates must include in their gross income the amounts for which the trust or estate received a deduction for distributions.(11) However, complex trusts and estates may make distributions to more than one beneficiary during a particular tax year, and some beneficiaries' rights to income may take precedence over others.