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BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 933
Experience:  Owner of a CPA firm
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Im administering a Trust as the appointed Trustee by the

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I'm administering a Trust as the appointed Trustee by the Trust document. My CPA contends he can't file the final 1041 for me until all distributions to the beneficiaries are made and all accounts closed. So for 2011, the 1041 was filed without the income (mostly capital gains) passing through on K-1's to the beneficiaries. Do you agree that this was the right way to file form 1041. I think K-1's should have been used in conjunction with the 1041 form of course.

In 2012, the house that was in Trust was sold and funds are soon to be distributed.

However, they are still some undistributed funds and, if distributed prior to the August 31, 2012 deadline, there would be no funds to pay the CPA without prepaying him first. Also, as Trustee I wanted to wait until September 30, 2012 to distribute all funds as a precaution against unknown liability popping up. I would appreciate your thoughts on this matter.

Hello and thank you for your question.


It sounds like things are being done correctly. Income should be reported on the Schedule K-1 according to the trusts' tax year, which I assume is a fiscal year ending August 31st based on your question.


The CPA is correct in that the trust should not file a final tax return until all assets have be distributed to the beneficiaries. Waiting until after a trust's fiscal year end to do this would generally require the filing of an additional tax return and thus lead to more administrative fees. It is not in your interest to wait unless you reasonably believe there are more liabilities out there (if so, try to find them and get them paid prior to the fiscal year end). Your CPA should account for his fee on the final return also and I assume he/she will handle that part properly.


If all goes well you will be able to wrap up the trust and file the final return this year. I hope this is helpful.

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