Short Year Estate 1041

[Santorini]

Taxpayer died Feb 2006. If filing a short year FYE 07/31/06, would the correct year of form 1041 to use be 2005 or 2006? And under which Code section can I find this information?

Thanks

[Roland Slugg]

2006

The year printed on the tax forms should always match the year in which the yaxable year begins. This is true even for a short tax year that begins and ends in the same calendar year. If this estate files another F-1041, starting on August 1, 2006, it will also use "2006" forms. There probably isn't an IRC section governing this, but it may be in the Regs somewhere, and it's definitely covered in the instruction booklets for the various main forms.

You also need to use the 2006 tax laws and rates, some of which may not yet be known with certainty. Therefore, you may wish to delay the preparation of the return for at least two or three months.

[Elisabeth]

What if the tax return is due before the next year forms arrive

I have a partnership that terminated July 1st, 2006. The 1065 is due 3 1/2 months after the year end, which would be November 15th, 2006. I can't wait until 2007 to file a return on a 2006 form. The short tax year is 1/1/2006 to 7/1/2006. So I am using the 2005 return and entering in the taxable year info on the appropriate lines at the top of the 1065.

[Elisabeth]

Per Partnership 1065 Form Instructions for 2005

When To File

Generally, a domestic partnership must file Form 1065 by the 15th day of the 4th month following the date its tax year ended as shown at the top of Form 1065. Period Covered

Period Covered for 2005 Form 1065

Form 1065 is an information return for calendar year 2005 and fiscal years beginning in 2005 and ending in 2006. If the return is for a fiscal year or a short tax year, fill in the tax year space at the top of Form 1065 and each Schedule K-1.

The 2005 Form 1065 may also be used if:
The partnership has a tax year of less than 12 months that begins and ends in 2006 and
The 2006 Form 1065 is not available by the time the partnership is required to file its return.
However, the partnership must show its 2006 tax year on the 2005 Form 1065 and incorporate any tax law changes that are effective for tax years beginning after 2005.

[Unregistered]

Taxpayer died Feb 2006. If filing a short year FYE 07/31/06, would the correct year of form 1041 to use be 2005 or 2006? And under which Code section can I find this information?

Thanks

Since the return is due 3 1/2 months after the close of the tax year you have chosen (7/31/06) , You will haev to use the 2005 Form 1041. Just fill in the idates at the top of the form for a fiscal year and check the "Initial Return" box on the 1041 under the address box. You may also be checking the "Final return" box if the return is both the initial and final since you rapped up the estate in only one tax year.

Hope this is helpful to you.

TheTaxPro