Max W Posted March 10, 2020 Report Share Posted March 10, 2020 Deceased had a revocable living trust. The way I understand it is that the Revocable trust makes the 645 election file as a 1041 estate. However the attorney for the trust obtained a EIN for an Administrative Trust. Does this kill the 645 election? Is there any remedy? Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted March 10, 2020 Report Share Posted March 10, 2020 9 hours ago, Max W said: Deceased had a revocable living trust. The way I understand it is that the Revocable trust makes the 645 election file as a 1041 estate. However the attorney for the trust obtained a EIN for an Administrative Trust. Does this kill the 645 election? Is there any remedy? Max, as I understand your post the attorney has obtained an EIN for the estate but you wish to make the 645 election for the trust to become the estate, but if you do that the estate will end up with two EIN's. The IRS has a process for canceling EIN's that are not needed, so you could cancel the EIN obtained by the attorney. Try a search for "cancelling EIN". Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted March 10, 2020 Report Share Posted March 10, 2020 9 hours ago, Max W said: Deceased had a revocable living trust. The way I understand it is that the Revocable trust makes the 645 election file as a 1041 estate. However the attorney for the trust obtained a EIN for an Administrative Trust. Does this kill the 645 election? Is there any remedy? Often, a revocable trust becomes irrevocable at death, but I've never obtained a new EIN for the trust. I think the lawyer screwed up and I would ignore or cancel that EIN. The EIN for the estate is the return that you will file and the trust will be a part of the estate. Be aware, you're supposed to calculate the DNI and income distributed separately, as if they were two separate returns. The only time the 645 election makes sense is when the estate is fiscal year, because then the beneficiaries get to defer income for a year. It also helps to match income with expenses and distributions in the fiscal year, so you don't have a lot of income but not expenses or distributions. Quote Link to comment Share on other sites More sharing options...
Max W Posted March 12, 2020 Author Report Share Posted March 12, 2020 On 3/10/2020 at 7:25 AM, DANRVAN said: Max, as I understand your post the attorney has obtained an EIN for the estate but you wish to make the 645 election for the trust to become the estate, but if you do that the estate will end up with two EIN's. The IRS has a process for canceling EIN's that are not needed, so you could cancel the EIN obtained by the attorney. Try a search for "cancelling EIN". The IRS does not cancel EIN's. They are essentially forever. However, if it is never used, there do not seem to be an consequences." "The IRS cannot cancel your EIN. Once an EIN has been assigned to a business entity, it becomes the permanent Federal taxpayer identification number for that entity. Regardless of whether the EIN is ever used to file Federal tax returns, the EIN is never reused or reassigned to another business entity. The EIN will still belong to the business entity and can be used at a later date, should the need arise." https://www.irs.gov/businesses/small-businesses-self-employed/canceling-an-ein-closing-your-account Quote Link to comment Share on other sites More sharing options...
Max W Posted March 12, 2020 Author Report Share Posted March 12, 2020 I just thought of something else. The Trustee opened a bank account under the Trust EIN and funds have been going into that. Can the bank transfer funds to another account with an Estate EIN without any consequences? The only thing I can think of would be interest reporting, if there was any. A large amount of stocks were sold in Dec. There is going to be about a 10% LTCG of about $400K. The Trust tax will be roughly $17K. So it would be advantageous to avoid the Trust and convert to an Estate. The bright side - if the sale had been held off until now, the stocks would have suffered a tremendous loss. Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted March 12, 2020 Report Share Posted March 12, 2020 37 minutes ago, Max W said: The IRS does not cancel EIN's. Sorry my misunderstanding, the IRS can close the account related to the EIN but cannot cancel the EIN. Have you filled out form 8855? Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted March 12, 2020 Report Share Posted March 12, 2020 Are you saying the attorney obtained an EIN for the trust or for the estate? Quote Link to comment Share on other sites More sharing options...
Max W Posted March 12, 2020 Author Report Share Posted March 12, 2020 Just now, DANRVAN said: Are you saying the attorney obtained an EIN for the trust or for the estate? For the Trust. I spoke to the attorney the other day. She is mainly an estate planning attorney, but also calls herself a tax attorney as well. Yet she had never heard of the 645 option. The 8855 hasn't been submitted yet, because an Estate EIN will be needed. And that depend if it can be done successfully as there is already a Trust bank account, as discussed previously. Quote Link to comment Share on other sites More sharing options...
Max W Posted March 12, 2020 Author Report Share Posted March 12, 2020 Correction: Looked at the wrong chart on Trust/Estate LTCG. It is 20% of $12500, so the LTCG will only be about $7500. 1 Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted March 12, 2020 Report Share Posted March 12, 2020 18 minutes ago, Max W said: And that depend if it can be done successfully as there is already a Trust bank account, Off the top of my head, I do not see a problem. Obtain EIN for estate. Fill out 8855 using EIN for estate in part one and for trust in part two. For tax purposes I believe the trust is now part of the estate, so trust assets do not need to be transferred to estate. Quote Link to comment Share on other sites More sharing options...
Hahn1040 Posted March 12, 2020 Report Share Posted March 12, 2020 Read the instructions for form 1041 Taxpayer identification number (TIN). All QRTs must obtain a new TIN following the death of the decedent whether or not a section 645 election is made. it addresses in detail how to handle the trust 1 Quote Link to comment Share on other sites More sharing options...
Max W Posted March 12, 2020 Author Report Share Posted March 12, 2020 4 minutes ago, Hahn1040 said: Read the instructions for form 1041 Taxpayer identification number (TIN). All QRTs must obtain a new TIN following the death of the decedent whether or not a section 645 election is made. it addresses in detail how to handle the trust Thanks for replying, but that is not the issue. The QRT did obtain an EIN, but for a Trust, not an Estate. The SS-4 specifically states it is for an administrative Trust. The question is can this trust be converted to an estate? Quote Link to comment Share on other sites More sharing options...
Hahn1040 Posted March 12, 2020 Report Share Posted March 12, 2020 When you read through the instructions you see that a determining factor is were all of the assets in the trust? Is there also a will? Are there assets that require an estate? Is there an executor or is it administered by the trustee? Quote Link to comment Share on other sites More sharing options...
Max W Posted March 12, 2020 Author Report Share Posted March 12, 2020 The house and the stocks were in the QRT. The will is not a factor, because in CA, with a QRT there is always a pour-over will that takes care of such things as jewelry, household belongings, cars, pets, etc. The proceeds from the sales of home and stock were deposited in to the Administrative Trust. However, I see that the brokerage account was not retitled to the Adm Trust. I have to find out if the house was retitled. A trustee administers. Quote Link to comment Share on other sites More sharing options...
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