baystorm

If the estate had no income for the second year - then there is no need to file an estate income tax return for the second year. I would mark the 1041 that you file for year 1 as 'final' The only reason that I see that you may want to file a second 1041 is for the beneficiaries to deduct some of the final expenses/costs of administering the estate - depending on this amount may not be worth the trouble and additional costs in your fees. good luck

The step up basis would be at the date of death of the decendent or the alternate valuation 6 months later. Depending on how much is money is involved it may be beneficial for the trust to spend some money on a professional appraisal. Good luck and Have a great week

In reply to your second question - I have found it difficult to have 1099 reissued by the payor when there are mistakes. I have done this in the past is report the rent on Schedule E and then take a corresponding deduction on Schedule E - it washes out - and then just report on the trust income tax return. In regards to the first question - where both properties jointly titled in each trust? or did one trust hold the rental and other trust hold the non-rental?

Whomever is the executor of the last will and testament would sign the personal tax return form 1040. This is a person who would have to be appointed by the local probate court. Even though the decedent had a trust, they more than likely also had a Will. If Will can not be found, then the granddaughter can petition the local court to be appointed the executor. Also look at Form 56 good luck

Generally if the decedent could change the beneficiary then he had 'incidents of ownership' over the policy - look at code section 2042(2); Reg section 20.2042-1© good luck

I must admit that it has been a year or two since I had to file a 706 - but based upon your post I would say that the insurance proceeds from the VA would not have to be included on the return. All assets that a decendent had "incidents of ownership and control over" are included in the gross taxable estate of a decendent. If he could not change a beneficiary, assign the policy, cash in the policy, take a loan out against the policy - then he would not have incidents of owernship and control over the policy and as such the proceeds should not be included on the 706. In any event I assume the death benefits are not that much - by the way are you also an attorney? good luck

It should be a matter of State Law in regards to whether or not they have to go through a "judicial" process to terminate the marriage. Based upon past experience I would suggest that you make sure you have an engagement letter or just prepare the return for one of the spouses but not both. I had a situation several years ago whereby I was preparing the couples return for about 8 or 9 years and then they got a divorce. I prepared two separate tax returns but of course the one spouse was not happy on how I allocated some of the deductions between the two returns and it started to get ugly (even though I did everything proper) My policy is now that when a couple is divorced, getting divorced, etc., I will only retain one spouse as a client and tell the other spouse (in a nice way) to go elsewhere. good luck

All I can say that it is nice to be on a real professional forum unlike that other forum that seems to have alot of inexperienced preparers who are asking simply basic questions that any professional tax preparer should know. Thank you to all and I hope you all have an excellent season!

Over the last few years I have been getting more referrals, etc from individuals who have not filed past tax returns. I currently have a client who has not filed since 2000. I always get a retainer up front and makes sure that I have an engagement letter with the client. If the client owes the IRS money and the client is going to want you to negotiate with the IRS, then the retainer is even larger. However, I no longer accept their original source docs unless they have also given me a retainer. I have some client(s) who dropped off a box of records - they never dropped off a check so I never even started their tax return. But their original source documents are taking up space in my office and can't find or locate them to pick up the records yet I do not want to shred them.