[diamond373]

My Mother died in 2007 and had a simple Trust. She had a total of five annuities. Two went directly to my sister and I as 50/50 beneficiaries. The other three went into the trust to maintain the home/property until it sells. My sister and I were both issued 1099-I for the money we received from the two annuities and we each paid the taxes with our 2007 IRS returns. However, suddenly two weeks ago my sister informs me that she wants to split the interest on the three annuities that are in the trust. (Trust being the beneficiary... not my sister and I) My sister and I may never see that money if the house doesn't sell in our lifetimes. There is 80K of interest... accrued over many years but, all became taxable on the event of Mom's death. My sister virtually demanded that I agree to amend my 2007 taxes to include half of the interest... and she would amend hers for the other half. She says this will save the trust because she and I are in a lower tax bracket. It seems shady to me... like a loophole that while it may be legal... it might not be moral.

And it will cost me tremendously. She paid the IRS last year. I got a sizable refund which I would lose plus interest back to the IRS. When I began asking questions of her... and of the CPA she hired... I was told that I simply needed to trust his knowledge and ignore what my own tax preparer said... or the IRS said. Without my questions answered the CPA she hired wrote me a letter telling me that I am costing the trust money as I delay my decision. Keep in mind that my sister should have filed the 2007 Trust IRS return six months ago... her delay is costing interest and penalties every day. (she is the trustee)

The IRS (800#) assured me that it is for the trust to file because they are the beneficiary... not me. My sister claims it will only be on paper... and that the trust will pay the resulting IRS bill, penalties, and interest accrued. However, she would not commit to reimbursing me for the loss of my original 2007 refund. (over $5,000) I feel intuitively that something here stinks. Because she and the CPA both were angry I'd contacted the IRS for clarification. If you've read my other post under {other law} you know that this is the same sister/trustee who fired the trust attorney and refuses to provide yearly accounting statements of her actions as trustee.

[AtlantaTaxExpert]

This is NOT the place to resolve this issue, as it is MUCH too complicated to properly address here.

You need to hire your own CPA who is experienced in trust work to guide you on this issue.