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Accountants Who Come To Us For Guidance David M. Kaufmann, CPA Voice: 720.493.4804 Email: contact2@kaufmann-cpa.com |
Does Your Tax Professional Know His Fiduciary (trust & estate) Tax Law?Lets face it. It is hard to tell if a "professional" knows his stuff. So, how do you know if the person that is about to prepare a trust or estate return for you knows his stuff? I have a good test. Here is the question: "When do you want the estate to have a shorter tax year than listed below?" Note that the table below is for estate income tax returns, Form 1041, not estate tax returns, Form 706. Only about one in twelve estate income tax returns are due on April 15! Please note that the IRS Notice "CP 575 B" that assigns an employer ID number (tax ID number) to the estate will probably say that the Form 1041 is due on April 15. That is because the attorney or accountant that applied for the ID number may not understand when the tax return is due. (If they don't understand that, what else don't they understand!) That IRS notice is incorrect, unless the date of death is in January! The year - end that is specified on the first filed Form 1041 determines the year - end, not IRS Notice "CP 575 B." [Treasury Regulation §1.441-1(c)(1)] To prepare a trust or estate income tax return (Form 1041), consider reviewing a Form 1041 checklist.
Note: In almost all cases, trusts (not to be confused with estates) will have a December 31 year end. Trusts might have a fiscal year end, if a Section 645 election was made. Will the estate or trust be selling a residence? This frequently generates LOSSES not a gain for the beneficiaries or heirs. (See Est. of Pauline Miller, TC Memo 1967-44 and H.V. Watkins, TC Memo 1973-1967) The loss can reduce the beneficiaries taxes, particularly, if high real estate commissions were paid. Was the residence sold within 1 year after the date of death? If so, you might not need a date of death appraisal. A timely Section 266 election can increase a loss or reduce a gain. If you have questions about this, do not hesitate to contact us at 1-720-493-4804. We serve clients all over the country. A large portion of my business is preparing tax returns and tax planning for trusts, estates and beneficiaries of trusts and estates. Circular 230 Notice: The information contained here are simplifications of complex subjects. We recommend that you talk to a CPA about this issue. To ensure compliance with requirements imposed by the IRS, we inform you that (i) any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
A Checklist For Preparing
Form 1041 |