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If a trust is required to distribute income to non-resident aliens, which is subject to withholding, is the withholding related to the year in which the distribution is actually made? Or is it related to the year the income is generated, and therefore taxable. For example, if 2005 income is reported on Forms K-1 to the non-resident aliens, but the distributions are not made until March of 2006 when the Fiduciary return is prepared, can you still report the withholding as 2005 withholding, even though the distribution was in 2006. Will this cause you to miss any deadlines, with respect to filing the associated withholding forms? This is a federal and California issue with respect to the trusts in question.
Don Baker
don@donbakercpa.com
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