balancing a Trust account -

[WITAXLADY]

ok - this is a dumb accounting question -

but I am a tax preparer and this is my mom's and I am not going to pay for this..

I have to go from 7/11/2020 to 7/10/2021 - amend as there was an error and then do the second year - so want to do correctly.

I know how to balance an account -

but for the listing of what was paid and debts to be paid - do I use what was cleared from 7/11/2020 - her date of death and her bank account

that worked

but for the end- do I take what was written out  - and add to the bills paid? or wouldn't those go in bills (debts) to be paid, along with those that are not due yet??

 

Thank you,

Darlene

 

 

[Lion EA]

Cash basis trust? If so, then what was paid, was paid.

[DANRVAN]

4 hours ago, WITAXLADY said:

I have to go from 7/11/2020 to 7/10/2021 -

Is this a trust or an estate?  Trust would have a calendar year end unless a section 645 election has been made.

The first tax year of an estate must end no later than the month end preceding D.O.D.  So in this case the first year end must end no later than 08/31/21.

4 hours ago, WITAXLADY said:

but for the end- do I take what was written out  - and add to the bills paid? or wouldn't those go in bills (debts) to be paid, along with those that are not due yet??

I am not sure what you are asking.  But as Lion pointed out, you use cash basis unless accrual was elected on the original return.

[jklcpa]

Darlene, if this is the estate, as Danrvan said the estate's tax year "must end no later than the month end preceding D.O.D." and I am sure Dan meant to say 6/30/21. 

That means that with the D.O.D. of 7/11/20, the estate could choose as it's first year end date to be any one of the month end dates between 7/31/20 through 6/30/21 because the estate's first tax year can't exceed 12 months.

[WITAXLADY]

thank you

yes - cash

and it was a Trust Account - demanded by my brothers and the Attorney said also - and it is date of death to 1 year

Or are we treating it like an Estate? It is her house put into a Trust for 20 years. Actually started in 2018 before she passed away. I am being asked for the accounting after her death as I spent all the money  - she did not have. I am funding it with my money as she never finished funding it and the best part, the savings she put aside for it was in an older savings account that was her husbands and it was set up as a Beneficiary account. so when she passed, all the money that was to fund the house, was split up amongst her children!

So the Trust says 20 years or until there is not any way to fund it.. so I think it could have been funded by renting it out as an air BnB but my brothers are forcing a sale - it has been 2 years of saying I coerced her - although she has been trying to do this since 2012! long before I was in the picture..

Family

[Lee B]

My experience with trusts is that most clients just view it "legal stuff" and just do what they would have done if there was no trust.

 

[WITAXLADY]

Thank you - sort of what being done - now trying to balance it - and it should be simple but it does not balance!!

 

Thx d

 

[Abby Normal]

18 hours ago, WITAXLADY said:

Thank you - sort of what being done - now trying to balance it - and it should be simple but it does not balance!!

 

This should have be entered in QuickBooks (or some other accounting software) from the start. Entities need books.

[DANRVAN]

On 8/15/2022 at 10:52 AM, WITAXLADY said:

Or are we treating it like an Estate? It is her house put into a Trust for 20 years.

A 645 election would have to be made by filing form 8855 by the due date of the first return.  To qualify for the election, the trust would have to been revocable up to DOD. 

Also, the election would end no later than 2 years after her death. 

So in order to file an accurate amended tax return, you will need to use a year end of 12/31, unless the election was previously made.

Actually you will need to file an amended return showing zero income or expenses for 7/11/20 - 7/10/21 (the dates on the original return).  Then file an original return for the correct period ending on 12/31/20.  When the late filing notice comes, refer to the original return with the incorrect periods when requesting penalty abatement.  (I dealt with a similar HR BLOCK correction a few years ago) 

 

 

On 8/15/2022 at 10:52 AM, WITAXLADY said:

So the Trust says 20 years or until there is not any way to fund it.. so I think it could have been funded by renting it out as an air BnB but my brothers are forcing a sale - it has been 2 years of saying I coerced her

 

On 8/15/2022 at 12:12 PM, WITAXLADY said:

- now trying to balance it - and it should be simple but it does not balance!!

 

Seems like it should be matter of posting deposits and disb. from bank statements, including anything you have personally paid.

With the family issues you mentioned, sounds like you should consider turning over accounting and tax prep to a third party to work with the attorney.

 

[DANRVAN]

On 8/15/2022 at 3:38 AM, jklcpa said:

meant to say 6/30/21. 

And he should know better than posting past his bedtime....thanks for the correction!

[WITAXLADY]

tHERE IS NO "INCOME" ONLY WHAT i AM LOANING TO KEEP IT GOING..

oops -

They both balance!

2nd year was a transposition - grr- Math teachers or anyone should not become accountants nor bookkeepers if they have a tendency to transpose!

And that is why someone else is doing it , not myself..

I just provide and proof.

Their turn - Mediator and the boys - and court is next Thursday - how far will I have to give up to

lose as the mediator says all they want to do is Win! -meaning basically sell the house - auction all off after getting a few items they want, and me not getting anything for any of the work I did -

Well it was a gift from my mom - So Be It!

Thank you mom - did you think about this ahead of time?

She thought we would just miraculously get along!!

Thanks all.

D

 

[Lion EA]

You were a good daughter. Now you'll be able to put it all behind you with a clear conscience.

 

[Lee B]

When money is involved all of the ghosts and gremlins come out of the woodwork.

[WITAXLADY]

so it has been 2 weeks and I have not heard from the mediator, plan was to have the auction end of Oct -  - not that I have time to deal with that - I counted entities to be completed!!

Way too many before the 15th of Sept and what is with all the seminars in Sept! some people are still doing taxes..

Happy Labor Day you all

D

[Lion EA]

Hang in there, Darlene!

[WITAXLADY]

Thank you - I am just trying to ignore it while I do taxes!

I am stopping for 2 days and  - should not and move the date but too late now! - and celebrating our 45th Anniversary with church - renewal of vows and extended family dinner on Sun the 11th.

the 10th , our anniv - somehow we are babysitting - which we rarely do and now on our anniv - Hubby did that one..

hmm'