1041 k-1

[Magsteps]

I have a client who recently received a 1041 K-1 form. It is a 2017 K-1 form, but the fiscal year of the form shows a beginning date of 4/1/17 and an ending date of 3/31/18. It is my understanding that a fiscal year cannot end after the end of a calendar year, and that the form should actually be for tax year 2018, since the end of their fiscal year is March of 2018, but the accountant who prepared the form says the 2017 form is correct, and is refusing to file a corrected form without proof. Do you know of an IRS procedure or other regulation I can send to her for proof, or is she correct? Obviously, my client does not want to have to file an amended 2017 return if it can be avoided. A secondary question - my software is not even allowing me to enter the fiscal year into a 2017 return, but if the other accountant refuses to correct the K-1, how do I enter the form into a 2017 return (do I enter it as a calendar year, or will that raise red flags)?

[Lion]

A pass-through entity on a fiscal year, files its returns on forms for the year the fiscal year BEGINS. (Think about it: the next year forms might not be out yet.) The recipient of a K-1 from a fiscal year reports the K-1 information on his personal income tax returns for the year the trust/estate's year ENDED, uses the fiscal year ENDING date on the K-1 to report on his personal returns for that same year. By the way, a fiscal year ends on the last day of any month except December. A return filed as of 31 December would be from a calendar year entity. If you need to know how to do the data entry, please tell us your software or call their customer support.

[Burke]

I have a client who recently received a 1041 K-1 form. It is a 2017 K-1 form, but the fiscal year of the form shows a beginning date of 4/1/17 and an ending date of 3/31/18. It is my understanding that a fiscal year cannot end after the end of a calendar year, and that the form should actually be for tax year 2018, since the end of their fiscal year is March of 2018, but the accountant who prepared the form says the 2017 form is correct, and is refusing to file a corrected form

I am assuming that this is a decedent's estate, and they CAN elect to file a fiscal year return with the ending date falling in the next calendar year. A 1041 is also used for trusts, and they must file on a calendar year basis. You did not specify which this was. If this is an estate, the accountant is correct and the fiscal year ending in 2018 means the information goes on the TP's 2018 personal income tax return. (Regardless of the fact that the K-1 has 2017 printed on it in big numbers.) I wish they would revise the 1041 and K-1's so that the tax year is not shown except for the "beginning and ending date" at the top. I usually send a cover letter with the K-1 in these cases to alert the TP to which year it is reported. Lion is right. The instructions do say a fiscal year ends on the last day of the appropriate month. The estate probably closed on 3/18/18. No big deal.