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Hi and welcome to Just Answer!Several issues...Generally the Living Trust is revocable and as such is ignored while the person is alive - but the trust becomes irrevocable after the settler dies - and that is a separate legal entity. Such trust may be combined with the estate as ONE entity and in this case - only one tax return is filed. But you may treat the trust and the estate as separate entities and file two separate tax returns.The sale transaction of the house is reported on schedule D - www.irs.gov/pub/irs-pdf/f1041sd.pdf which us attached to the income tax return of the trust - form 1041 - http://www.irs.gov/pub/irs-pdf/f1041.pdfInherited property is always reported as long term - schedule D part II.The basis of the property is equal to the fair market value at the time father-in-law passed away. The trustee may have arrangement for not equal distribution out of the trust based on your circumstances and if agreed between all beneficiaries - there is no any tax liability because of that.
If beneficiaries will transfer the money AFTER they receive distribution - that would be gifts - and gift tax law will be in effect. The gift below $14,000 per person per year will not have any gift tax circumstances. If the gift is above that amount - the donor will be required to file a gift tax return, but there will not be any gift tax liability as long as the lifetime limit (currently $5,250,000) is not reached.
The form 1041 is an income tax return - for the due date - see instructions page 7 right column at the bottom - http://www.irs.gov/pub/irs-pdf/i1041.pdf
For calendar year estates and trusts, file Form 1041 and Schedule(s) K-1 on or before April 15, 2013. For fiscal year estates and trusts, file Form 1041 by the 15th day of the 4th month following the close of the tax year. For example, an estate that has a tax year that ends on June 30, 2013, must file Form 1041 by October 15, 2013. If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day.You may file a form 7004 if an extension is needed.Please let me know if you need any help.
I would prefer to file one tax return & combine the estate & trust now if possible to be able to pay any taxes due and make the final distributions to the brothers. How would that be accomplished if the 2013 forms are not out yet? Use a 2012 form and file as a short year?
First of all - because the property is inherited - you have a so-called stepped up basis - equal to the fair market value of the inherited asset at the time the decedent passed away. Assuming the property is sold at its fair market value - there is no gain - and should not be any tax liability.Forms for 2013 are not available yet - and are expected in January.Based on your information - the estate tax return for 2013 tax year will be due by Apr 15, 2014. No need to file it now.
We live in Maryland and will owe State inheritance tax because the estate is over one million. I would prefer to just get the taxes paid now if possible. (I am only able to see your answer one line at a time and it is difficult, any way to change that?)
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I have tax id #'s for both the estate & the trust. Can I still combine them? If so do I use the trust id# XXXXX the 8855 and the estate # XXXXX the 1041?
What is the Federal Estate Tax Return Proforma 706? On this list given us by the attorney who set up the living trust it says that must be filed within 9 months of date of death if the decedents estate excees one million dollars.
For tax purposes should the $$ paid to the brothers for the house come from our joint account or the estate account?