Those small businesses using partnership or S-Corporation formats issue Form K-1 to the respective owners. When income is assigned to the owner and there is no corresponding cash related to that income, then this income is referred to as ‘Phantom Income’. In effect, it is assigned income for tax purposes without the corresponding cash to pay the tax liability.
A trust instrument is a legal document that identifies a trust fund organization. In its articles, there are several clauses identifying name, purpose, time of existence, trustees and how proceeds are managed. It is generally filed with the secretary of the state or state corporation commission so the public has access to the information.