May 9, 1980
Your client is the grantor, sole trustee and life beneficiary of a trust; he has the power to amend, terminate or revoke the trust at will. You inquire as to the income tax liability and filing requirements of the trust.
Massachusetts General Laws Chapter 62, Section 10(e) states that if the Grantor is treated as the owner of any portion of a trust under Sections 671 to 678 of the Internal Revenue Code, income and losses of the trust are taxed to the grantor and are not taken into account in calculating the taxable income of the trust.
Your client must report the income, deductions and credits of the trust on Schedule E of his individual income tax return (Form 1). If the trust's Massachusetts gross income is greater than $100, he must also file a Fiduciary Income Tax Return Form 2 and designate it " Information Return;" all items on the Form 2 must be completed except the computation of tax section. In addition, a copy of Schedule MK-1 indicating the income, deductions and credits of the Trust, must be attached to the front of Form 2 and to page 2 of Form 1, of his individual income tax return.
I am enclosing a copy of schedule MK-1 for your assistance.
Very truly yours,
/s/L. Joyce Hampers
L. Joyce Hampers
Commissioner of Revenue