When to recognize income on a fiduciary return (1041)?

[mrtaxtip]

I have a client (1041) with a fiscal year ending Nov 30. The estate redeemed saving bonds during the year but held the proceeds in the estate account. The fiscal year just closed two weeks ago. We want to allow the income to pass through to beneficiaries if possible. IRS pub 559 has a section that seems to allow this if the actual distribution takes place within 65 days of the close of the estate's year. Has anyone had any experience with this exception?

[Roland Slugg]

This is true. There is a box to check on F-1041. It's one of the questions at the bottom of page 2. There are limitations, so read the F-1041 instructions. (Code §663(3) and Regs §1.663(b)-1(a))

[mrtaxtip]

Thanks. The distribution was overlooked during the tax year. This will lower the tax bill significantly.