How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Stephen G. Your Own Question

Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4010
Experience:  Extensive Experience with Tax, Financial & Estate Issues
Type Your Tax Question Here...
Stephen G. is online now
A new question is answered every 9 seconds

Trust tax question for Steve G.

Customer Question

Trust tax question for Steve G.
Submitted: 2 years ago.
Category: Tax
Expert:  Stephen G. replied 2 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

Olivia:

Stephen E. Grizey :

Can you wait a bit until I can get to this?

Customer:

of course.

Stephen E. Grizey :

OK, I'll get back to it as soon as I can.

Stephen E. Grizey :

Working on your questions......................

Stephen E. Grizey :

What type of trust did this turn into; I can't recall was there a surviving spouse?

Customer:

Complex. No surviving spouse

Stephen E. Grizey :

Why, is income being accumulated? Aren't you dealing with the final year of the trust & all the assets are being distributed to the beneficiaries?

Customer:

It is the first year of the trust where most of it has already been distributed by 12/31/11 as cash. I would like to finalize the trust but there is still this 40K in there as of 12/31.

Stephen E. Grizey :

Is there any reason to keep the 40K in the trust?

Customer:

Presumably (although I don't know) to pay final expenses et al. That 40K may be gone by now.

Stephen E. Grizey :

Re: your question re the capital loss; you will carry it over until the final year of the trust & then it gets passed on to the beneficiaries as per the 1041 instructions...................

Stephen E. Grizey :

Box 11, Codes B and C—Unused Capital Loss Carryover


Upon termination of the trust or decedent's estate, the beneficiary succeeding to the property is allowed as a deduction any unused capital loss carryover under section 1212. If the estate or trust incurs capital losses in the final year, use the Capital Loss Carryover Worksheet in the Instructions for Schedule D (Form 1041) to figure the amount of capital loss carryover to be allocated to the beneficiary.

Stephen E. Grizey :

That refers to the K-1 i

Stephen E. Grizey :

information

Customer:

Wonderful thanks. What about the life insurance?

Customer:

Do I need t log back in for this question?

Stephen E. Grizey :

No

Stephen E. Grizey :

Somebody locked me out & I had to go through gyrations to get back here

Stephen E. Grizey :

Also, as far as the basis for gain or loss goes you are probably stuck with the FMV at the date of death even though you might have a "step-down" verses, step up;

Customer:

Get out!

Stephen E. Grizey :

I need to re-read your "insurance question"

Customer:

Ok

Stephen E. Grizey :

re basis - you can't pick & chose without elections now that you can apply the step-up rules differently for estate tax purposes; it gets complicated;

Customer:

Dang.

Stephen E. Grizey :

On the life insurance you might have a bigger problem than you think.............

Customer:

OK...I'm dreading..what?

Stephen E. Grizey :

Life insurance proceeds of course aren't taxable (due to death), but it sounds like you have a policy that was cashed out prior to the decedent's death and therefore is taxable on the decedent's personal income tax return?

Stephen E. Grizey :

Why would someone do this?

Stephen E. Grizey :

The trust couldn't cash out a policy subsequent to the DOD unless it was on someone else's life.

Customer:

Oh Thank God. No, I think it was cashed out after death but I am gettinga 1099 which says 50K of it is taxable..

Stephen E. Grizey :

By the date of death it was cash, no step up.

Stephen E. Grizey :


Who's life was it on?

Customer:

Deceased

Stephen E. Grizey :

Are you sure it wasn't an annuity?

Customer:

Says life insurance...lemmee check again

Stephen E. Grizey :

You can't "cash out" a policy for a decedent................you would receive the proceeds of the policy with no taxable distribution

Stephen E. Grizey :

Something is rotten in the State of Denmark to coin a phrase................................

Customer:

I find a stmt that says variable annuity.

Stephen E. Grizey :

There you go

Customer:

Ok there I go where. I'm totally spun around.

Stephen E. Grizey :

Taxable to the beneficiaries through the trust, unless it was received prior to death

Customer:

Whew! Thank you. You are wise oh master.

Stephen E. Grizey :

doesn't sound like any pre or post mortem tax planning was done

Customer:

Don't know. I just got these people blind. What makes you think that?

Stephen E. Grizey :

Timing is all wrong; some of these transactions should have been executed after 1/1/2012, like the last one; all that taxable income would have been deferred for a year...............

Stephen E. Grizey :

I presume there was no taxable estate

Stephen E. Grizey :

They probably just wanted to get their hands on the money

Customer:

Yes, I see..genious. Thanks again Steve. I've learned a boatload.

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4010
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 6 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.