Lucho Posted June 24, 2008 Report Share Posted June 24, 2008 Would someone please explain to me in simple words the meaning of Tier 1 and Tier 2 distributions that is shown on the Beneficiariy's Imput Sheet Sch. K1, Form 1041. When I look in the dictionary I get more confused. I am studying to have some knowledge that can help me next year; I am using the program to complete a sample trust return and even though everyting else is going well, I still need to understand in the practice what is Tier 1 and Tier2. As always, I thank you in advance and may God continue blessing this forum. Have all of you a wonderful day. Quote Link to comment Share on other sites More sharing options...
zeke Posted June 24, 2008 Report Share Posted June 24, 2008 Lucho - You ask a good question. I too await the learned answer undoubtedly near. I respond to make a presonal remark. I have high regard for your determination to become informed on the convoluted inanity of the IRC - in apparently your second language! Hang in there!! Zeke Quote Link to comment Share on other sites More sharing options...
Lucho Posted June 24, 2008 Author Report Share Posted June 24, 2008 Lucho - You ask a good question. I too await the learned answer undoubtedly near. I respond to make a presonal remark. I have high regard for your determination to become informed on the convoluted inanity of the IRC - in apparently your second language! Hang in there!! Zeke Thank you very much. I will be back this evening (I am leaving right now to my regular job) Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted June 24, 2008 Report Share Posted June 24, 2008 Tier 1 amounts of income required to be distributed currently if payable out of either income or principal to the extend paid out of income. Tier 1 distributions less than or equal to DNI can be comprised of 100% taxable income. Tier 2 amounts (those other than Tier 1 and specific bequests IRC 663(a)) which are paid, credited, or required to be distributed. Tier 2 distributions are taxable income to the extent DNI exceeds the Tier 1 distributions. IRC 661 IRC 662 The IDD can not exceed DNI. Quote Link to comment Share on other sites More sharing options...
zeke Posted June 24, 2008 Report Share Posted June 24, 2008 Thanks RoyDaleOne. I learned something today! :D Quote Link to comment Share on other sites More sharing options...
Lucho Posted June 25, 2008 Author Report Share Posted June 25, 2008 Tier 1 amounts of income required to be distributed currently if payable out of either income or principal to the extend paid out of income. Tier 1 distributions less than or equal to DNI can be comprised of 100% taxable income. Tier 2 amounts (those other than Tier 1 and specific bequests IRC 663(a)) which are paid, credited, or required to be distributed. Tier 2 distributions are taxable income to the extent DNI exceeds the Tier 1 distributions. IRC 661 IRC 662 The IDD can not exceed DNI. Thank you RoyDaleOne. I appreciate your help. Quote Link to comment Share on other sites More sharing options...
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