The fiduciary of a complex trust or estate can elect annually to treat amounts paid or properly credited by the complex trust or estate to a beneficiary within the first 65 days following the close of the tax year as paid or credited on the last day of the immediately preceding tax year with respect to both the trust or estate and the beneficiary. The election applies to part or all of distributions made in the first 65 days of the tax year. The amount to which the election applies is limited to the greater of fiduciary accounting income or distributable net income, both of which must be reduced by amounts distributed during the year, excluding amounts covered by this election for the previous year. While distributions must be made during the first 65 days of the year, the election is made when the Form 1041 income tax return is filed. The 65th day of 2017 is Monday, March 6.
Administratively, this provision allows a fiduciary to determine the income of the complex trust or estate for the year just ended, while there is still time to make distributions that can be treated as having been made at the end of that year. The election may also present an opportunity to minimize the combined income tax burden and/or the combined 3.8% net investment income tax burden of the trust or estate and the beneficiaries. Also, when considering distributions and the 65-day election, liquidity, 2016 taxable income, 2017 taxable income, and other contemplated future distributions must be considered for both the trust or estate and the beneficiaries.
Please contact your HM&M tax advisor soon for help in analyzing the possible benefits of a 65-day election.
Related Posts
Effective January 1, 2015, under the Affordable Care Act (also known as ObamaCare), employers with 50 or more full-time equivalent employees on average during 2014, are considered Applicable Large Employers (ALEs) and are required to ...
Yesterday evening (March 31, 2020), the Small Business Administration released the Paycheck Protection Program (“PPP”) loan application form and information sheets for borrowers and for lenders. We include below a link to each of these ...
Ten 2017 Yearend Tips Influenced by The Tax Cuts and Jobs Act (“TCJA”) December 22,2017 President Trump signed the TCJA into law on Friday, December 22, 2017. Cautionary notes: The specific applications and appropriateness of ...
As a reminder second quarter payroll reports are due to be filed by July 31, 2020. If you have had no significant changes between the first and the second quarter your reporting requirements will be ...
Latest Blog
The landscape of gift and estate tax planning is experiencing significant shifts, with the upcoming 2026 sunset looming ...
Are you planning to make a Qualified Charitable Distribution (QCD) in 2024? Yes? Then read on … A ...
Please refer to the list below for some changes that will be made for 2023 v 2024. Bonus ...
HM&M Updates
Last month, Senior Manager, Pearl Balsara was invited to speak at the 2023 FPA DFW Annual Conference in ...
We are pleased to announce the winners of the 2022 HM&M Excellence Awards. Ronna Beemer, Keith Phillips, and ...
Huselton, Morgan and Maultsby is composed of a spectacular team of individuals. During our annual What’s Happening Meeting, ...