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Estate or Trust?


Max W

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Client's deceased father had a Revocable Living Trust.

The trust attorney told him to get a Trust EIN, which they did.

With RLT's don't they just use the deceased's SSN and file an estate return?

If so, it could be a problem because a 1099MISC for rental income was issued to the trust EIN.

What is the remedy?

TIA

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I believe all estates have to have an EIN, and the 1041 demands one (no place to put a SS#).  If you think about it, estate income under the deceased's Social would flow through to the deceased, which he couldn't have gotten because he was deceased.  At least I think I know this.  After today I feel like I don't know nothin'.  Does CODI income from a PTP get added to basis?  One client made a few dozen gifts, many $14k or less, but some to the same people, also gave savings bonds, stocks, and oh yea, his house but retained a life estate.  I think when savings bonds are transferred the accrued interest has to be reported by the giver, but then again after today I don't know nothin'.

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Many years ago you were required to file a 1041 for a revocable trust while still alive. They voided that and allow you to include it on your personal return since it ends up there anywhere. Have one client who INSISTS on filing a 1041 for his trust but oddly he doesn't require it for his wife's small trust. I put his social security number on there as that's what the prior CPA did and his attorney dictated I do. He's been doing it for 40 years and the IRS has never once commented on it.

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Wait until he dies.  I've had survivors come in with letters from IRS demanding 10 years of 1041s.  The important piece is how the assets are titled.  If they are in the trust's EIN, you have to file a trust return but can make an election to have all income and expenses flow through to the grantor. 

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