The Helen Shaggaggy Irrevocable Trust is a calendar year, cash basis taxpayer (EIN: 11-321654).

The Helen Shaggaggy Irrevocable Trust is a calendar year, cash basis taxpayer (EIN: 11-321654). The trust was created under the last will and testament of Helen Shaggaggy, who died on November 11, 2009. For the 2018 tax year, the MSIT’s books and records reflect the following transactions:


            Dividends (qualified)                                                              $30,000

            Gross Rents                                                                               25,000


                Bonds with the City of Troy                                                 25,000

                U.S. Series HH government bonds                                       20,000

Capital Gains

            RLD, Incorporated stock received from the Estate of Helen Shaggaggy

                Sale price – 12/2/2018                                $48,000

                Less: Basis (FMV on 11/11/2009)              <30,000>         18,000


            Trustee commissions (50% paid from income, 50%

                        paid from principal)                                                        5,300

            Legal Fees                                                                                 28,800

            Contribution – Michigan Humane Society (paid from

                        principal)                                                                       12,000

            Depreciation – rental property                                                    2,000

            Real estate tax – rental property                                                 4,000

            Repairs and Maintenance – rental property                                4,200

            Tax return preparation fee                                                             500

            Federal quarterly estimated tax payments                                  9,000

The legal fee was a legitimate trust expense incurred because of the choice of trust form.  The Trustee allocated the legal fee to the various income classes as follows:

            Dividends                                                                                $         0

            Taxable interest                                                                         16,000

            Tax-exempt interest                                                                    6,000

            Rents                                                                                           6,800

                        Total Legal Fee:                                                          $28,800

The propriety of the legal fee allocation is NOT in question.  The rental property is a commercial building located at 111 Lloyd Avenue, Troy, Michigan 48098.  Under the terms of the trust instrument (i.e. Helen Shaggaggy’s will), the $2,000 depreciation reserve equals the available tax depreciation deduction for the year. The trust instrument also specifies that all capital gains are allocable to principal and that the trustee has the discretion as to the amount of trust income distributed to William Shaggaggy, the sole individual beneficiary, as well as the charities specified in Ms. Shaggaggy’s will.  During 2018, the trustee distributed $24,000 of income to William and $12,000 to the Humane Socierty.

Please prepare the 2018 Form 1041 and any other form or schedule required for the HSIT Trust.

“Trustee”                                                         “Beneficiary”

Harry Bank and Trust                                     William H. Shaggaggy

3232 Mack Avenue                                         8675 Jenny Lane

Detroit, MI 48041                                           Troy, MI 48007

EIN: 82-3242424                                            SS#: 222-33-4444

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