1 more - 2553 - and trust - when is it due?

[WITAXLADY]

I have 2 businesses - Sch C and a Sch F - the owners passed away and the 2 siblings inherited the business,

One had a Revocable trust - if that makes a difference, not usre about the other.

So the one is now an Irrevocable Trust and the other is an Estate -

and these businesses are operating inside the Trusts

The businesses were both LLC's.  Do they now have to choose an entity inside the 1041 to file?

Because of the 2 siblings, they selected 1120S - (1 with shareholder of their own individual trusts, then a QSST and the other just the 2 of them)

Nothing has been filed as there have been no profits so earnings less than $600 - so no requirement to file the attorney and CPA said.

But now we have the 1120S  - does the 1120S need to file in 2020?

Just do not want to deal with late penalties.  Or file a request and pray they get it for an additional extension.

One Trust with the QSST - will probably run forever - so I need that answer for every year..

The other - one hopes to buy the other out - (huge Sch C /1120S loss to offset any gains) as their is land/buildings involved as a rental business. And then the final K-1 will be issued.

 

so the short question -

Is there a need for a 1120S within the 1041?

If so - does it need to be filed then by 9/15?

 

Sincerely,

Darlene

and yes, I have signed up for another 1041 class but they do not seem to address the issues I have! 

[Lion EA]

Where do you get these clients?! They're much more complex than my clients. I have no idea why a trust or an estate would form an 1120-S unless one already existed/was owned by the deceased. Some of the great minds here will jump in Saturday...

[Lee B]

In the last few years, I have finally realized my limitations and my areas of expertise.

If these were my clients, I would tell them I am not able to do their returns any longer.

[Sara EA]

You can only have one entity type.  You have an estate and a trust, each of which files Form 1041.    Just because the businesses didn't have income doesn't mean they didn't have expenses.  Also, both the trust and the estate may have other income that necessitates filing.  When the businesses are distributed by the trust and estate, the new individual owners can choose S corp status at that time, but not now.

[WITAXLADY]

Dear Sara,

So the businesses just run as ?? inside the Trust and do nothing until the Trust is finished? but the one trust is a forever trust and will never make money? As Christmas Trees are Capital gains..

And this is the one as QSST - .. so there is just a business no S corp? inside the Trust?

[Lion EA]

Were the businesses SMLLCs/disregarded entities? And, now the trusts want them to incorporate? What are they trying to accomplish?

[Sara EA]

You originally stated that the businesses were reported on Sch C and Sch F.  The trust and estate now own the businesses and report them on their separate 1041s.  There was never an S corp or any corp and there isn't one now. QSST doesn't come into play here.  That election is usually made when a shareholder in an S corp dies and that ownership transfers to a trust, which S corps can't have as owners.  You may have over-researched this, but look at all you've learned that you never knew existed!  I do that all the time and finally realize I have to drag myself away from the big, big picture and focus on the small piece in front of me.

[WITAXLADY]

Thank you,

I will go back to the attorney..

D