This article will help you complete the fiduciary portion of an Electing Small Business Trust (ESBT) return. The preparation process will vary based on the types of income the ESBT received in the year, since income from S Corporate stock is taxed at a different rate.
To create an ESBT return:
- On the left-side menu, select General.
- Click on the Client Information screen.
- Scroll down to the Miscellaneous Info section.
- From the Type of Entity list, select 8=ESBT (SCorp portion only).
- Enter the ESBT income on the various input screens.
If all of the trust's income is ESBT income, complete and review the return as you normally would; no other specific entries are needed.
If the trust had non-S corporation income:
You'll need to create two returns - one to calculate tax on the S corporate portion, and one to calculate tax on other income.
- Follow the steps above to complete the S corporate portion return.
- Go to the Check Return tab of the ESBT.
- Make note of the Total Tax calculated on Form 1041, line 24.
- Go to the Worksheets and review the Tax Calculation for Electing Small Business Trust (ESBT).
- Once you're satisfied with the results, go to the File Return tab.
- Select Partial Print on the left.
- Print or save the tax calculation worksheet to PDF.
Once the worksheet is printed and you know the amount of tax on the ESBT portion of the trust, you'll need to enter it into the complex trust (non-ESBT) return:
- Open the non-ESBT return.
- On the left-side menu, select Taxes.
- Click on Other Taxes.
- Scroll down to the Total Tax section.
- Enter the amount you noted above in ESBT tax [Adjust].
- Enter the tax calculation in Tax computation for ESBT tax. This info will generate a statement that's e-filed with the tax return.