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Christopher Phelps
Christopher Phelps, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2710
Experience:  CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
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Where to file state tax return for trust

Resolved Question:

I am successor trustee of an irrevocable trust. I will file a federal income tax return for the trust, but am unsure in which state a return must be filed. The only property of the trust is shares in a mutual fund. In the past, the trust filed a return in Virginia, because the first trustee and grantors lived there when the trust was created. The grantors now live in Maryland, and I live in New York, and no one lives in Virginia and there is no trust property there. What state should I file in?
Submitted: 9 years ago.
Category: Tax
Expert:  Christopher Phelps replied 9 years ago.

In New York, the residency of the fiduciary (i.e. you) has no bearing on whether the trust is a resident or non-resident of the state. What matters is whether the grantors were residents of New York when property was transferred to the trust and when it become irrevocable. Assuming that the grantors never lived in N.Y. when the property was transferred to the trust or when it became irrevocable, there appears to be no N.Y. filing requirement.

In Virginia a resident trust includes a trust created by a person domiciled in Virginia. Since the trust was originally created in VA it appears to meet this criteria (see I would recommend, based on the information you provided, that you file the VA form 770 Fiduciary Income Tax return.

Answers to some additional questions may help soldify the answer. Where does the trust benefiary(s) live? Does the trust distribute its income (some or all)?

Because it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.

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