My client died in 2009. All of her assets were in a revocable trust which became an irrevocable trust upon her death. She did not have enough assets to file a 706. She has no direct descendants, so she left $25000 to a cousin, and the rest of the assets in the trust are to be distributed to two charities.
For 2009 the trust received interest income of $5,000 and a 1099-R for $48,000. The trust made a distribution of $50,000 to the charities in 2010. I am making an election to treat the 2010 charitable contribution as a charitable deduction on the 2009 return, thus wiping out any taxable income. Does anyone see a problem with this?
Also, my client was a resident of Arizona, the assets (cash & bonds) are all located in Arizona, but the trustee (successor trustee) is located in Iowa. The trust document is silent on the location. Which state should I file a return in?