I need to prepare a grantor trust and complex trust on the same 1041. Lacerte only lets me choose one type of trust from the drop down.

[Dtaxacct]

IRS instructions indicate that the pre and post death activity should be reported on the same 1041 with both the grantor trust and complex trust boxes checked. Need the pre-death activity to go to a grantor letter. Need the post death activity to report as a complex trust. A prior response in this forum indicated two short year 1041s are needed but I don't think this is correct. Can Lacerte accommodate both a grantor and complex trust on the same 1041? If so, I can't figure out how to do it. Any guidance?

I only have one tax id for the trust and the full year activity from the broker was reported under this tax id on a 1099. Trust has filed as a grantor trust in prior years. If I have to do two short year returns do I mark the grantor trust final and the complex trust as initial? Since I'll be using the same tax id for both I assume I will have to paper file one of the tax returns?

[PhoebeRoberts · Accepted solution]

If it were me doing it, I'd use two Lacerte files, and attach a PDF of the grantor letter (generated out of one file) to the complex trust 1041 (generated out of the other) before e-filing. There may be a more elegant way to do that in Lacerte, but an expeditious workaround is sometimes the best you get.

[Dtaxacct]

Thank you Phoebe! In your opinion, would you e-file the complex trust 1041 (with the grantor letter attached) or would you print it out, physically "X" the "Grantor type trust" box so that it is marked along with the "complex trust" box that Lacerte already has marked and then mail it in?

[PhoebeRoberts]

Up to you. Honestly, I don't think the IRS looks much at 1041s, so while I agree that having both boxes checked is the better presentation, I hate having to paper file returns.