Fiduciary Income Tax

Transcription

1 Fiduciary Income Tax Prepared For: Western New York Paralegal Association January, 0 Presented By: Dale B. Demyanick, CPA ddemyanick@lumsdencpa.com Robert P. Ingrasci, CPA ringrasci@lumsdencpa.com Cyclorama Building 9 Franklin Street Buffalo, New York Fax: -8-

2 Fiduciary Income Tax January, 0 I. Introduction a. Form 0 - U.S. Income Tax Return for Estates and Trusts b. Due date of Form 0 - th day of the th month after end of tax year. c. Extension of Time to File - Form 00 - Five-Month Extension d. Form 0 Filing Requirements: i. Any taxable income for the tax year, ii. Gross income for the tax year of $00 or more, or iii. A nonresident alien beneficiary e. Estimated tax payment requirements: i. Trusts ii. Estates II. Types of Trusts a. Simple Trust: i. All income must be distributed annually ii. Trustee may have authority to distribute amounts allocated to corpus iii. Tax Exemption - $00 iv. Most Common Types:. Inter vivos Trust. Testamentary Trust b. Complex Trust: i. Does not qualify as a Simple Trust ii. Trustee may have authority to distribute income and/or corpus iii. Tax Exemption - $00

3 III. Year End c. Grantor Trust (Revocable): i. All items of income and expense pass through to Grantor ii. No Tax Exemption iii. Grantor usually retains control of trust assets iv. Trust becomes irrevocable at Grantor's death a. All Trusts must use the calendar year for income tax purposes. b. Decedent's Estate may choose calendar year or fiscal year for income tax purposes. i. The year end is determined when the first return is filed, which may not be more than months from the date of death and must end on the last day of a month. IV. Information Required to Prepare Form 0 a. Copy of Trust Instrument (Will in the case of an Estate or Testamentary Trust) b. Bank and Brokerage Account Forms 099 c. Partnership, estate, trust, S corporation income or loss (Form K-) d. Details of sales or exchanges of securities, including cost basis e. Rental Income f. All other income V. Expenses/Deductions a. Deductible Expenses on Form 0: i. Attorney Fees ii. Fiduciary Fees iii. Accountant and Tax Preparation Fees iv. Real Estate Taxes v. Administration Expenses vi. Charitable deductions made under the terms of the will or trust agreement vii. Miscellaneous Deductions subject to the % Floor. Investment Advisory Fees

4 b. Expenses not deductible on Form 0: i. Household maintenance and repairs ii. Utilities c. Allocation of Deductible Expenses: i. Income - Generally One Third (/) ii. Principal - Generally Two Thirds (/) iii. Exception:. Fees allocable to preparation of Fiduciary Accounting - 00% Principal iv. Allocation of Deductions to Tax-Exempt Income d. Income distribution deduction VI. Accounting Income a. Income available to be distributed to the income beneficiary after allocable expenses (One- Third portion) have been subtracted. VII. Net Investment Income Tax (NIIT) (Medicare Tax) a..8% Medicare Tax on the lesser of: i. The Trust's or Estate's undistributed net investment income, or ii. The excess of the Trust's Adjusted Gross Income (AGI) over the dollar amount at which the highest tax bracket begins for the tax year $,90 b. Net Investment Income: i. Investment income less allocable expenses ii. Includes, but is not limited to, interest, dividends, capital gains, rental and royalty income, non-qualified annuities, business income from passive trades or businesses. c. Excluded Trusts: i. Charitable Trusts pursuant to IRC Sec. 0 or ii. Grantor Trusts (NII reported by Grantor on Form 00)

5 VIII. Other Issues a. Section (b) election: i. Income may be distributed to beneficiaries within days after the end of the year. ii. Qualifies for income distribution deduction in year prior to distribution. iii. The beneficiary (ies) will report the income for the year in which the deduction was taken. b. Final Returns: i. Excess deductions upon termination ii. Capital loss carryovers iii. No income tax to Trust/Estate IX. State Income Tax Issues a. File return for state of domicile. b. File returns for states in which income is produced c. Provide fiduciary adjustment items for beneficiaries i. U.S. Treasury Interest ii. Municipal bond interest for nonresident states iii. State income taxes paid

6 0 Department of the Treasury U.S. Income Tax Return for Estates and Trusts 0 For calendar year 0 or fiscal year beginning, 0 and ending, OMB No Name of estate or trust (If a grantor type trust, see the instructions.) A Check all that apply: C Employer identification number Decedent's estate 890 " Simple trust BRIDGET BOLAND TRUST D Date entity created X Complex trust Qualified disability trust Name and title of fiduciary 0//000 E Nonexempt charitable and splitinterest ESBT (S portion only) DALE B. DEMYANICK, TRUSTEE trusts, check applicable Grantor type trust Number, street, and room or suite no. (If a P.O. box, see the instructions.) box(es), see instructions. Form Bankruptcy estate-ch. Described in sec. 9(a)(). Bankruptcy estate-ch. City or town, state or province, country, and ZIP or foreign postal code Check here if not a private foundation Pooled income fund BUFFALO, NY 0 Described in sec. 9(a)() B Number of Schedules K- F Check Initial return Final return Amended return Net operating loss carryback applicable attached boxes: Change in trust's name Change in fiduciary Change in fiduciary's name Change in fiduciary's address G Check here if the estate or filing trust made a section election Trust EIN Interest income ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE STATEMENT a Total ordinary dividends ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE STATEMENT a b Qualified dividends allocable to: () Beneficiaries 0,00 () Estate or trust Business income or (loss). Attach Schedule C or C-EZ (Form 00) ~~~~~~~~~~~~~~~~~~~~~~ Capital gain or (loss). Attach Schedule D (Form 0) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Rents, royalties, partnerships, other estates and trusts, etc. Attach Schedule E (Form 00) ~~~~~~~~~~~~ Farm income or (loss). Attach Schedule F (Form 00) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Ordinary gain or (loss). Attach Form 9 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 8 Other income. List type and amount 8 9 Total income. Combine lines, a, and through Interest. Check if Form 9 is attached ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0 Taxes ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Fiduciary fees ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Charitable deduction (from Schedule A, line ) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Attorney, accountant, and return preparer fees ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ a Other deductions not subject to the % floor (attach schedule) ~~~~~~~~~~~~~~~~~~~~~~~~~ STMT a b Net operating loss deduction (see instructions) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ b c Allowable miscellaneous itemized deductions subject to the % floor ~~~~~~~~~~~~~~~~~~~~~~ c Add lines 0 through c Adjusted total income or (loss). Subtract line from line 9 ~~~~~~~~~~,80 8 Income distribution deduction (from Schedule B, line ). Attach Schedules K- (Form 0) ~~~~~~~~~~~ 8 9 Estate tax deduction including certain generation-skipping taxes (attach computation) ~~~~~~~~~~~~~~ 9 0 Exemption ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0 Add lines 8 through 0 Taxable income. Subtract line from line. If a loss, see instructions ~~~~~~~~~~~~~~~~~~~~ Total tax (from Schedule G, line ) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Payments: a 0 estimated tax payments and amount applied from 0 return ~~~~~~~~~~~~~~~~ a b Estimated tax payments allocated to beneficiaries (from Form 0-T) ~~~~~~~~~~~~~~~~~~~~~ b c Subtract line b from line a ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ c d Tax paid with Form 00 (see instructions) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ d e Federal income tax withheld. If any is from Form(s) 099, check ~~~~~~~~~~~~~~~~~~ e Other payments: f Form 9 ; g Form ; Total h Total payments. Add lines c through e, and h~~~~~~~~~~~~~~~~~~~~~~~~~~~ Estimated tax penalty (see instructions) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Tax due. If line is smaller than the total of lines and, enter amount owed ~~~~~~~~~~~~~~~~ 8 Overpayment. If line is larger than the total of lines and, enter amount overpaid ~~~~~~~~~~~~~ 8 9 Amount of line 8 to be: a Credited to 0 estimated tax ; b Refunded 9 Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Income Deductions Tax and Payments Sign Here Paid Preparer Use Only = LHA 9 FRANKLIN STREET Signature of fiduciary or officer representing fiduciary Date EIN of fiduciary if a Print/Type preparer's name Preparer's signature financial institution For Paperwork Reduction Act Notice, see the separate instructions. May the IRS discuss this return with the preparer shown below (see instr.)? X Yes No Date Check if PTIN DALE B. DEMYANICK self- employed P00 Firm's name LUMSDEN & MCCORMICK, LLP 9 Firm's EIN 9-08 Firm's address 9 FRANKLIN STREET BUFFALO, NY 0 Phone no " 0,00 0,0,0,,80 0,90-0 Form (0)

7 Form 0 (0) Schedule A Charitable Deduction. Do not complete for a simple trust or a pooled income fund. Amounts paid or permanently set aside for charitable purposes from gross income (see instructions) ~~~~~~~~~~ Tax-exempt income allocable to charitable contributions (see instructions) ~~~~~~~~~~~~~~~~~~~~~~ Subtract line from line ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Capital gains for the tax year allocated to corpus and paid or permanently set aside for charitable purposes ~~~~~~~~ Add lines and ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Section 0 exclusion allocable to capital gains paid or permanently set aside for charitable purposes (see instructions) ~~ Charitable deduction. Subtract line from line. Enter here and on page, line Schedule B 8 Distributable net income. Combine lines through. If zero or less, enter -0- If a complex trust, enter accounting income for the tax year as ~~~~~~~~~~~~~~~~~~~~ determined under the governing instrument and applicable local law ~~~~~~~~~ 8 9 Income required to be distributed currently ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0 Other amounts paid, credited, or otherwise required to be distributed ~~~~~~~~~~~~~~~~~~~~~~~~~ Total distributions. Add lines 9 and If greater than line 8, see instructions ~~~~~~~~~~~~~~~~~~~~~ Enter the amount of tax-exempt income included on line ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Tentative income distribution deduction. Subtract line from line ~~~~~~~~~~~~~~~~~~~~~~~~~ Tentative income distribution deduction. Subtract line from line. If zero or less, enter -0- ~~~~~~~~~~~~~~~ Income distribution deduction. Enter the smaller of line or line here and on page, line 8 Schedule G Tax Computation (see instructions) Tax: a Tax on taxable income (see instructions) ~~~~~~~~~~~~~~~~~ a b Tax on lump-sum distributions. Attach Form 9 ~~~~~~~~~~~~~ b c Alternative minimum tax (from Schedule I (Form 0), line ) ~~~~~~~ c d Total. Add lines a through c a Foreign tax credit. Attach Form ~~~~~~~~~~~~~~~~~~~~~~~ a b General business credit. Attach Form 800 ~~~~~~~~~~~~~~~~~~~~ b c Credit for prior year minimum tax. Attach Form 880 ~~~~~~~~~~~~~~~~ c d Bond credits. Attach Form 89 ~~~~~~~~~~~~~~~~~~~~~~~~~ d e Total credits. Add lines a through d ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Subtract line e from line d. If zero or less, enter -0- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Net investment income tax from Form 890, line ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Recapture taxes. Check if from: Form Form 8 ~~~~~~~~~~~~~~~~~~~~~~~ Household employment taxes. Attach Schedule H (Form 00) ~~~~~~~~~~~~~~~~~~~~~~~~~~~ Total tax. Add lines through. Enter here and on page, line Adjusted total income (see instructions) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Adjusted tax-exempt interest ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Total net gain from Schedule D (Form 0), line 9, column () (see instructions) ~~~~~~~~~~~~~~~~~~~ Enter amount from Schedule A, line (minus any allocable section 0 exclusion) ~~~~~~~~~~~~~~~~~~ Capital gains for the tax year included on Schedule A, line (see instructions) ~~~~~~~~~~~~~~~~~~~~~ Enter any gain from page, line, as a negative number. If page, line, is a loss, enter the loss as a positive number ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Other Information BRIDGET BOLAND TRUST -890 Income Distribution Deduction 9,0 Did the estate or trust receive tax-exempt income? If "Yes," attach a computation of the allocation of expenses ~~~~~~~~~~~~~~~~~ Enter the amount of tax-exempt interest income and exempt-interest dividends $ Did the estate or trust receive all or any part of the earnings (salary, wages, and other compensation) of any individual by reason of a contract assignment or similar arrangement? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ At any time during calendar year 0, did the estate or trust have an interest in or a signature or other authority over a bank, securities, or other financial account in a foreign country? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ See the instructions for exceptions and filing requirements for FinCEN Form. If "Yes," enter the name of the foreign country During the tax year, did the estate or trust receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? If "Yes," the estate or trust may have to file Form See instructions ~~~~~~~~~~~~~~~~~~~~~~~~~~ X Did the estate or trust receive, or pay, any qualified residence interest on seller-provided financing? If "Yes," see the instructions for required attachment ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ X If this is an estate or a complex trust making the section (b) election, check here (see instructions) ~~~~~~~~~~~~~~~~ To make a section (e)() election, attach Schedule D (Form 0), and check here (see instructions) ~~~~~~~~~~~~~~~ 8 If the decedent's estate has been open for more than years, attach an explanation for the delay in closing the estate, and check here ~~~ 9 Are any present or future trust beneficiaries skip persons? See instructions X Form (0) 9 0 d e Yes 0 Page,80,80 0,00 0,00 0,00,80, E BRIDGET BOLAND TRUST E0-D No X X X