Form 8855

[Max W]

Client with a QRT died Dec 15, 2016.  Can form 8855 still be filed, or does a short year for the trust have to be filed, and then a trust and estate return for 2017?

[SaraEA]

The 8855 is filed by the estate. Put it on a fiscal year ending Nov 30, 2017 and you'll be fine.

[Max W]

So, Sara, is what you are saying is that the estate lawyer should have filed the 8855?  What if he didn't.?

[SaraEA]

No, it can be filed by the due date of the estate return (including extensions).  If you use a fiscal year, it will be due March 15, 2018 (August 31 if you use an extension).  Good idea to put it on extension if there are brokerage statements that don't arrive until March 30 (and then get corrected twice).

Since this was a revocable trust, did it file its own return or were the assets in the decedent's Soc Sec number and the income/expenses reported on the individual return?  If that's the case, often the grantor had large expenses in the year of death that might wipe out the trust's taxable income.  You'll have to do the returns both ways to see if you really want to make the Section 645 election.

[Max W]

The decedent's 1040 was filed.  His only asset was his home that was rented out in his last year. His medical care offset the rental income and a small pension & SS.   The home is valued at around $1M.  The benes -2- will probably keep renting rather than selling.

[SaraEA]

The advantage of making the 645 election at this point is that the estate and trust will file a single 1041 return, and the trust will be able to use a fiscal year.  The election is good for two years after death.  Is the home going to be distributed to the beneficiaries or go into an irrevocable trust?  It sounds like the estate won't have any income but the trust will, so there may be no point in making the election, i.e., the estate won't have to file a 1041 anyway.  If the trust missed its filing deadline, though, this may be the way to go.

[Max W]

Since the decedent was a widower, it won't be converted to an irrevocable trust and the house will be distributed to the two beneficiaries.