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Hi all, I have a client is the trustee on his aunt's estate. The aunt has passed away and the trust will distribute all assets to the beneficiaries in 2020 and early 2021. I researched that all distributions paid within 65 days after end of calendar year can be treated as if paid by 12/31. Does this apply to all expenses as well such as the Trust's tax return preparation fees and legal fees. This would allow us to file the 1041 as a final tax return in 2020 although not all expenses and distributions are made until early 2021.
thanks for the help!
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No it doesn't apply to deductions. Have them pay you by 12/31.
If this is really an estate, consider using a fiscal year. Trusts have to use calendar year.
The more I know the more I don’t know.
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Thank you! Your reply is very helpful.
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Estates don't have trustees. In some situations, a trust can elect to be taxed as an estate under Section 645, which then allows a fiscal year election. If that looks complicated, refer the client to someone more familiar with trust and estate taxation.
