Jump to content
ATX Community


  • Content Count

  • Joined

  • Last visited

  • Days Won



  • Rank
    ATXaholics Anonymous

Profile Information

  • State

Recent Profile Visitors

3,858 profile views


    Sorry if I am getting off topic, but the whole point of the B trust is to serve as a by pass, set up prior to death of first of spouse to shelter his/her estate tax exemption. Why would it be created and funded for any other purpose?
  2. The recapture of the credit produced a tax deduction. The deduction eliminates the recapture. What am I missing?


    An "A - B" trust arrangement is an estate planning tool which creates two trust. The "A" trust is a marital trust. The" B" trust is a By-pass trust (also know as credit shelter trust) which is funded on D.OD. of the first spouse. Whatever you are dealing with, 654 election is only good for the first couple of years so no election if dealing with estate of spouse who died 4 years ago.
  4. Deducting an expense not allowable by the tax code?
  5. I would show total premium on line 29 and payback zero. Sounds crazy but give your client the benefit of the doubt and let him decide. Explain to the client and document in writing how he wishes to proceed and consequences if IRS disagrees. As I understand the situation, the instant he claims the excess PTC he is in effect not liable for it since he can then claim the repayment as a deduction. If he pays back the PTC and does not claim it on line 29, then he is overstating his income by an allowable deduction. It seems like catch a 21 situation, but if the client wants to go that route I would fight for him.


    The A trust would be the marital trust and the B trust would be the by pass trust which is funded on date of date. In order to qualify for sect 645 the trust must be revocable at taxpayers death (actually the moment before), seems like bypass trust would meet that qualification but better to consult legal dept.


    Are you thinking about making the election for the A trust or B trust? Also curious why? There is the fiscal year advantage but the accounting can get sticky.
  8. Also the tax savings today will most likely out weigh the future gain considering SE and ordinary tax vs capital gain subject to 1250.
  9. That quote from 1.1014.4 (a)(2) is also confusing. It is an illustrative statement of the general rule of that paragraph which basically means there is not a 2nd step up when the asset passes from the estate to the heir. The preceding paragraph 1.1014.4 (a)(1) tells us the adjusted basis of depreciable of property passes from the estate to the heirs. An estate is allowed depreciation per section 167(d), therefore adjusted basis includes deprecation allowed or allowable as with any other entity.
  10. After assets pass from estate, heirs get stepped up basis less depreciation allowable by estate. Look up Uniform of Basis Rules per reg 1.1014-4. That can be significant if estate has a long drawn out duration.
  11. In the situation I referred to above the estate had more income to off set in the current tax year so 3115 worked better than an amended return.
  12. Yep, recently did one from HR Block screw up. They also overlooked to file an initial short year and accrual accounting which would have offset income with legal expenses.
  13. That article did not mention the case of Reuben v US and over looked the end result of the Dorrance case in which a zero basis was determined. In Reuben, the 9th cir relied on Dorrance in determining that the taxpayer had no cost basis. In both the Dorrance and Reuben cases, the courts were critical of the Fisher case in which the "Open Transaction Doctrine" was applied in determining a cost basis. In fact, the court in Fisher referred to it as a rare and extraordinary situation in applying the "Open Transaction Doctrine". The IRS indicates it will continue to litigate this issue and has 2 out of 3 cases in it's favor; and one weak case against it.

    1040X Return

    I agree, never use it and like to keep a file as "originally filed" if I ever need to refer back to it.
  • Create New...