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.
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.
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