Hello!   I have a client who died 10/31/2023 who had a house and two investment accounts in a revocable trust.  There have been several legal issues so the first return has not yet been filed.  When the executor is ready to file...

1. What are some considerations to consider to select the reporting year, whether to elect the first year as a short filing period, 10/31-12/31/2023 or to use a fiscal year, 10/31/2023-10/30/2024?  The house was distributed in 2024.

2.  How do we represent the distribution of the home on the K-1 given that it is a distribution of principal? with the change in FMV as a gain (loss) based on the difference of the FMV on the date of distribution and the date of death.

3.  The house was actually in the original trust to go to three people evenly.  One person did not want it so the other two people paid the third person out in cash 7 months after date of death. Is there any representation necessary on the tax return? Should a K-1 go to the person who received the cash as a distribution of principal and gain/loss if there was any?

Thank you!