What is a section 645 election?

What is a section 645 election?

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. Generally, estates have the ability to elect a fiscal year end or a calendar year end, whereas trusts default to a calendar year end.

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.

How long does a section 645 election last?

By contrast, when a trust is part of a taxable estate that is required to file an estate tax return, the 645 election remains effective until the later of two years after the date of death or six months after the final determination of estate tax liability.

Can a 645 election be made late?

For the election to be valid, the election form must be filed not later than the time prescribed under section 6072 for filing the Form 1041 for the first taxable year of the trust, taking into account the trustee’s election to treat the trust as an estate under section 645 (regardless of whether there is sufficient …

Can I efile form 8855?

Making a 645 election on a 1041 does not prevent it from being e-filed, but printing, signatures and paper-filing are required for Form 8855 (Election To Treat a Qualified Revocable Trust as Part of an Estate).

Can an estate have a fiscal year end?

Typically, the estate calendar year starts on the day of the estate owner’s death and ends on Dec. 31 of the same year. The executor, however, can file an election to choose a fiscal year, which means the tax year ends on the last day of the month before the one-year anniversary of death.

Can you make a 645 election without an estate?

Trust only: A qualified revocable trust making an IRC Sec. 645(a) election without an estate executor, or related estate, is still treated as an estate for IRC purposes while the election is in effect [Treas.

Can a QSST be a complex trust?

In this way, the TAI related to the S corporation stock can be distributed while allowing the income from the other interests and assets to continue to be accumulated inside a trust. Under this scenario, the subtrust would elect QSST status, while the original trust could continue to be a complex trust.

What is a 663 B election?

Section 663(b) allows a trustee or executor to make an election to treat all or any portion of amounts paid to beneficiaries within 65 days of the close of the trust’s or estate’s tax year as though they were made on the last day of the prior tax year.

What is a section 643 E 3 election?

An Election is Possible 643(e)(3) provides that a fiduciary may irrevocably elect to recognize gain or loss on the distribution, as if the property distributed had been sold to the beneficiary at its fair market value on the date of the distribution.

Is Form 8855 filed separately?

BecauseForm 8855 is a freestanding form with signature lines under the penalties of perjury and not any type of schedule, it appears that filing of the form separately is the suggested manner of making the 645 election, particularly because the instructions to Form 8855 do not mention the need to file it or a copy with …

What is a § 645 election?

If the election is made, trust income and expenses will be reported by the estate on the estate’s income tax return, and the trust will be treated as part of the estate. Only one Form 1041 (for the estate) is required if the § 645 election is made, even though legally, the trust, rather than the estate, continues to hold the assets.

How many 1041 forms do I need for a 645 election?

Only one Form 1041 (for the estate) is required if the § 645 election is made, even though legally, the trust, rather than the estate, continues to hold the assets. Certainly, the income and expenses of the estate continue to be reported by the estate on the estate’s income tax return.

Who is the decedent under Section 645 of the QRT?

Once a section 645 election has been made for the trust, the trust shall be treated as an electing trust throughout the entire election period. (3) Decedent. The decedent is the individual who was treated as the owner of the QRT under section 676 on the date of that individual’s death.

Should I elect § 645 for my estate?

Generally, estates have the ability to elect a fiscal year end or a calendar year end, whereas trusts default to a calendar year end. 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. That sounds great, but why would you want a fiscal year end?