Estate 1041

[TAX4US]

If estate(form 1041) has taxable income at end of its first year, can estate pay heirs(distributions) before filing return to pass out this income? IE, estate has 40K of taxable income because it did not make any distributions during the year. Can exec pay out a number(41k) and avoid the estate from paying all that tax.(3 heirs involved)

Other part, exec presented bill to estate before end of year. Estate paid bill after end of year. Can it accrue that bill and deduct it?

Thanks for the help.

[New York Enrolled Agent]

This is what IRC §663 says in part:

(b) Distributions in first sixty-five days of taxable year

(1) General rule
If within the first 65 days of any taxable year of an estate or a trust, an amount is properly paid or credited, such amount shall be considered paid or credited on the last day of the preceding taxable year.
(2) Limitation
Paragraph (1) shall apply with respect to any taxable year of an estate or a trust only if the executor of such estate or the fiduciary of such trust (as the case may be) elects, in such manner and at such time as the Secretary prescribes by regulations, to have paragraph (1) apply for such taxable year.

[TAXNJ]

See The Tax Book 15-18 for additional information regarding the 65-day rule [IRC §663(b) election].

[TAX4US]

I thought so. Now how about the second question in the original post concerning the Exec.'s bill?

[TAXNJ]

I thought so. Now how about the second question in the original post concerning the Exec.'s bill?

There is valuable information in The Tax Book tabs 21 & 15, etc . regarding Estates to answer and support many of your questions.

Now how about you reading The Tax Book tab 21 for an answer? Have you done any research to prepare the return?

[TAX4US]

Being a single person office, I do read a lot and draw a conclusion. When a second opinion seems to agree then I feel comfortable that I am not causing the tp to owe more than he should. Some areas that I don't see every day I look up first before I post a question. That's all. Thank you for the insight.

[TAXNJ]

Being a single person office, I do read a lot and draw a conclusion. When a second opinion seems to agree then I feel comfortable that I am not causing the tp to owe more than he should. Some areas that I don't see every day I look up first before I post a question. That's all. Thank you for the insight.

Yes, helps to get other suggestions.

From your original post could not see if you had an opinion with your question. That’s why the reply post suggested “There is valuable information in The Tax Book tabs 21 & 15, etc . regarding Estates to answer and support many of your questions.”.

[ToledoEd]

I often ask for other opinions without expressing mine so that I do not influence the answer that I receive. People like to agree with what they hear and that often sways the answer that you receive.

[Gretel]

Yep, in addition, some unfamiliar areas of the tax code are so confusing that it is difficult to come up with a good question, let alone an idea for the solution. I always missed having someone in my office to bounce ideas off to. This message board and the one from NAEA are my budies and nothing wrong with asking a question, that someone else may call stupid.

[Burke]

I thought so. Now how about the second question in the original post concerning the Exec.'s bill?

You will find the answer in IRS Reg. 20.2053-1(d)(4). I am not sure TTB addresses this directly. But, yes it can be done.