Can a trust make a 645 election?
The trustees of each qualified revocable trust (QRT) and the executor of the related estate, if any, use Form 8855 to make a section 645 election. This election allows a QRT to be treated and taxed (for income tax purposes) as part of its related estate during the election period.
What is a 645 election trust?
Internal Revenue Code section 645 provides an election for a revocable trust to be treated as part of the decedent’s probate estate for income tax purposes.
Why would you make a 645 election?
IRC §645 provides an irrevocable election to treat a qualified revocable trust as part of the decedent’s estate for federal income tax purposes. When the election is made by the executor and trustee, tax advantages available to an estate are available to the trust.
Can you make a 645 election for an irrevocable trust?
The section 645 election once made is irrevocable. (i) Tax treatment of the combined electing trust and related estate. If there is an executor, the electing trust is treated, during the election period, as part of the related estate for all purposes of subtitle A of the Internal Revenue Code.
When can a 645 election be made?
The IRC § 645 election is irrevocable once made. The election must be made on IRS Form 8855 (Election to Treat a Qualified Revocable Trust as Part of an Estate) by the due date, including extensions, of the estate’s initial income tax return.
Can I file a late 645 election?
645 election are the material participation rules and the use of a fiscal year. The election must be made using Form 8855, Election to Treat a Qualified Revocable Trust as Part of an Estate, and filed no later than the due date—including extensions—of the first income tax return for the related estate.
Do you have to make a 645 election every year?
Can a trust use a fiscal year end?
Trusts are required to use a calendar year end, no matter when the tax year begins. The probate estate would have to file a separate income tax return (Form 1041) to report estate income earned after death. An estate may use a fiscal year end of its choosing, not to exceed a one-year period after death.
Is my trust filing as an estate under Sec 645?
Well, a §645 election allows the executor of an estate and the trustee of a revocable trust to elect to treat the estate and the trust as one for tax purposes. If you elect §645, it gives you the ability to have the trust on a fiscal year end as well, meaning only one tax return.
Can a trust use a fiscal year?
645 treats a qualified revocable trust as part of the decedent’s estate for Federal income tax purposes. California follows the Federal election. The electing trust can select any fiscal year that falls within 12 months from the date of death. A trust that does not make the election must use a calendar year.
What is an election trust?
From Wikipedia, the free encyclopedia. A voting trust is an arrangement whereby the shares in a company of one or more shareholders and the voting rights attached thereto are legally transferred to a trustee, usually for a specified period of time (the “trust period”).
Can a trust elect to pay tax?
When trust beneficiaries receive distributions from the trust’s principal balance, they do not have to pay taxes on the distribution. The trust must pay taxes on any interest income it holds and does not distribute past year-end. Interest income the trust distributes is taxable to the beneficiary who receives it.