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.
Can you wait a bit until I can get to this?
OK, I'll get back to it as soon as I can.
Working on your questions......................
What type of trust did this turn into; I can't recall was there a surviving spouse?
Complex. No surviving spouse
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?
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.
Is there any reason to keep the 40K in the trust?
Presumably (although I don't know) to pay final expenses et al. That 40K may be gone by now.
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...................
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.
That refers to the K-1 i
Wonderful thanks. What about the life insurance?
Do I need t log back in for this question?
Somebody locked me out & I had to go through gyrations to get back here
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;
I need to re-read your "insurance question"
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;
On the life insurance you might have a bigger problem than you think.............
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?
Why would someone do this?
The trust couldn't cash out a policy subsequent to the DOD unless it was on someone else's life.
Oh Thank God. No, I think it was cashed out after death but I am gettinga 1099 which says 50K of it is taxable..
By the date of death it was cash, no step up.
Who's life was it on?
Are you sure it wasn't an annuity?
Says life insurance...lemmee check again
You can't "cash out" a policy for a decedent................you would receive the proceeds of the policy with no taxable distribution
Something is rotten in the State of Denmark to coin a phrase................................
I find a stmt that says variable annuity.
There you go
Ok there I go where. I'm totally spun around.
Taxable to the beneficiaries through the trust, unless it was received prior to death
Whew! Thank you. You are wise oh master.
doesn't sound like any pre or post mortem tax planning was done
Don't know. I just got these people blind. What makes you think that?
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...............
I presume there was no taxable estate
They probably just wanted to get their hands on the money
Yes, I see..genious. Thanks again Steve. I've learned a boatload.