On form 1041, can a loss be distributed via form K-1 to the grantor? If not, which schedule distributes the loss?

ANSWER

The BIDaWIZ Team's Answer:

In general, a grantor trust is ignored for income tax purposes and all of the income, deductions, etc., are treated as belonging directly to the grantor. If the entire trust is a grantor trust, fill in only the entity information of Form 1041. Do not show any dollar amounts on the form itself; show dollar amounts only on an attachment to the form. This means that the grantor would report the losses on their personal tax return. Do not use Schedule K-1 (Form 1041) as the attachment. The attachment should include the name, identifying number, and address of the person(s) to whom the income is taxable. If there is no such taxable income, that should be left blank.