You must first read the trust. Look especially for the clause that discusses payment of income or principal after the death of the last surviving trustor.
If this section says that the successor trustee "shall", "must", or other words to REQUIRE payment of income to the beneficiary(ies), it is a SIMPLE TRUST. With a Simple trust, the beneficiaries are deemed to receive the income during the year of the return (in this case, 2006) even though they may have received it in 2007. Even though the income may not have been paid at this late date, several estate attorneys have stated that as long as payment is made in a reasonable time after the close of the year, it is still considered a 2006 payment. [in a Charitable Remainder Trust, the IRS even states this reasonable time might be as long as the extended due date - Oct 15th!]
In this instance of a Simple Trust, all income would be deemed distributed and a K-1 issued to each beneficiary for their share of the "net accounting income". This would essentially mean that the trust itself may pay no income tax; unless it has capital gains which generally do not get passed out [unless it is the termination year of the trust].
If the successor trustee has "discretion" to pay income, or if principal is distributed, it is a COMPLEX TRUST. Complex trusts may elect to treat distributions made in the first 65 days of the following year as made in the reporting tax year. Thus, for a complex trust one could make a distribution by about March 6, 2007 and treat it as if it were made in 2006. In the case of a complex trust (i.e., trustee has discretion to pay out income), the trust could end up paying a sizeable tax liability if no distributions were made in 2006 or by 3/6/07.
If it is a Qualified Revocable Trust, the Trustee and Executor (if there is one) may ELECT to treat the trust as an estate under IRC 645. If this is elected (by fililng Form 8855 with the initial filed return), the trust may use a fiscal year. Also, on Form 1041, the "Estate" box should be checked not one of the Trust boxes. The fiscal year end cannot be more than 12 months and must end at the end of a month.
One caveat if using the 645 election: it can only be used for two years. At the end of 24 months, a new TIN must be obtained for the trust and a calender year end used. This will usually result in a short year for the Trust. If the Trust will distribute all assets within the two years [and is not an ongoing trust] then the 645 may be useful.
Good Luck.
