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Discussion Forum Index --> Advanced Tax Questions --> Trust 645 election, final year for estate
Discussion Forum Index --> Tax Questions --> Trust 645 election, final year for estate
Taxdue (talk|edits) said:
| 4 March 2008
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| After 2 years (no 706) 645 election expires. Electing trust still has assets, and will continue to file returns. In either case of whether there originally was an executor or not, are excess deductions and/or cap loss CF carried out to beneficiaries or is electing trust given K1 with these items, and benes no K1? Since the electing trust is supposed to get a new EIN, what happens to cap losses?
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Dennis (talk|edits) said:
| 4 March 2008
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| At the close of the election period, a distribution is deemed to be made by the combined QRT and related estate, if there is an executor, or, if there is no executor, from the QRT. The deemed distribution is to a new trust and consists of the QRT share, as determined under the separate share rule. The combined related estate and QRT, or the QRT, as the case may be, is entitled to a distribution deduction with respect to the deemed distribution. The new trust will include the distribution in gross income to the extent required under the inclusion rules of Code §662.
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Taxdue (talk|edits) said:
| 4 March 2008
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| Yeah, I can find commentary / regs like that too. How does the separate share rule affect who gets K1 in final year of estate with excess deductions - does the trust get the only one? How do cap loss carryforwards get entered on the remaining trust's return to eventually flow out to benes?
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Dennis (talk|edits) said:
| 5 March 2008
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| I don't see how I can be more clear. The separate share rule will effect internal application of the termination distribution, not external.
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Taxdue (talk|edits) said:
| 5 March 2008
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| Please give an example. What do you mean by internal application?
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Dennis (talk|edits) said:
| 5 March 2008
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| If applicable, the separate share rule treats a single trust as if it were multiple trusts. That is internal. From the outside, it is still one trust. In the simple case, you need to understand that under state law the original QRT is still the same entity it was at date of death. Combination for tax purpose changes nothing. On termination (for tax purpose), the combined entity distributes on a K-1 and obladee, obladah.♫
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Discussion deleted by user and restored by moderator.
Dennis (talk|edits) said:
| 5 March 2008
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| The basic point to this deleted thread is that the election to combine the estate and Qualified Revocable Trust is for tax purpose only; it does not change the nature of the entities themselves.
If the trust still exists at the end of the election period it will receive a final year k-1 as an artificially new entity with income and expense calculated as a separate share and file a short year return (even if applicable ending date is 12/31). I've never found an ironclad rule for allocating carryforward items during the election period, but consistency is advised. My QRT balance sheet has line items for these.
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Discussion deleted by user and restored by moderator.
Kevinh5 (talk|edits) said:
| 5 March 2008
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| TaxDue - please leave this thread for others benefit.
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Discussion deleted by user and restored by moderator.
Kevinh5 (talk|edits) said:
| 5 March 2008
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| rest of the community - please enforce the ban on answering TaxDue's questions, since he insists on deleting everyone's comments.
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Michaelstar (talk|edits) said:
| 5 March 2008
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| I agree Kevin - TaxDue was out of line last night when he blasted Dennis and then deleated this post entirely. Thanks for stepping up to the plate as you have done!
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Kevinh5 (talk|edits) said:
| 5 March 2008
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| you, Dennis, and I all saw the value of this discussion for others. Dennis had alerted Tim of this issue too.
TA is not a place to get your questions answered, it is a place for us all to learn something. If someone wants a private question answered, they should pay for a research service, like NATP's $23 per question charge. Then they would 'own' the discussion. Anything written here is public for the community.
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