Very late K-1

[Margaret CPA in OH]

Is client out of luck? He was beneficiary of mother's trust created at death. It had huge losses short and long term when holdings were liquidated. Preparer of that trust return neglected to mark 2010 as final. So it was carried on and on. Client self-prepared returns taking $3000 loss each year with no contact from IRS.

I looked at this last year and advised that he go back to original preparer (I kind of suspect it might be himself) and amend 2010 as it was then within SOL for amendment. Last week he brings in K-1 with huge losses showing as final year deductions. But his 2010 return is past the 3 years SOL. Any hope at all for him?

I'm leaning towards letting those dogs sleep on. But if 2010 was wrong, how to correct 2011, 2012 and 2013 still in statute? It grates when people smart in other ways try to save money in things they don't know.

[Lynn EA USTCP in Louisiana]

Was the estate k-1 a calendar year form?  Or fiscal year?  If fiscal year was the ending date in 2010 or 2011? If in 2011 you might be able to amend his 2011 return. 

Not sure this helps......

[Margaret CPA in OH]

The trust was mother's and created 9.6.2000 on her death, the first return was calendar year 2000. It seems it was open until elderly father died. Attorney who completed that return (I see now) passed through all losses to my client when they should have been split 3 ways, hence the amended return.

I cannot amend his 2010 return but his self-prepared return took $3000 in losses so maybe it isn't so bad. I think maybe I can just correct the loss carryovers for the record. It will still take many years. And I think IRS wouldn't mind having less offset to taxable income.

Thanks, Lynn.

[rfassett]

The trust was mother's and created 9.6.2000 on her death, the first return was calendar year 2000. It seems it was open until elderly father died. Attorney who completed that return (I see now) passed through all losses to my client when they should have been split 3 ways, hence the amended return.

I cannot amend his 2010 return but his self-prepared return took $3000 in losses so maybe it isn't so bad. I think maybe I can just correct the loss carryovers for the record. It will still take many years. And I think IRS wouldn't mind having less offset to taxable income.

Thanks, Lynn.

 

That sounds like a plan!  Just make sure you keep good notes.