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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12059
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Can I adopt a 52-53 week accounting period federal estate

Customer Question

Can I adopt a 52-53 week accounting period for a federal estate income tax return form 1041? The instructions reference a a period less than 12 months that ends on the last day of a month but it does not specify that this is the only variety of a fiscal year that may be selected. Furthermore, it references the document publication 538 which describes the 52-53 week tax year as a type of fiscal year.
Thank you,
Jessica
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.
You can choose any period of 12 months or less that ends on the last day of a month.
It CAN sometimes end up being 53 weeks
Touch hose this on the 1041
Customer: replied 1 year ago.
I'm sorry, this does not answer my question.
Customer: replied 1 year ago.
Can you make my question available for another professional to answer?
Expert:  Lane replied 1 year ago.
it does ... The issue of whether the fiscal year is 52 or 53 weeks is coincidental to WHICH 12 month fiscal year is
One of the most versatile elections available to an estate is the ability to make a fiscal year election for the estate. The executor or personal representative may elect any year end provided it ends on the last day of the month and does not exceed 12 months in length.
But again the 52 vs 53 issue is just coincidental to WHIICH 12 month period is chosen
is due three months and 15 days after the elected year end, so it is important to address this early in the administrative process. One of the first step in the estate process is to file for a tax identification number. This application (Form SS-4) will ask for the year end of the trust. The attorney or accountant preparing the application will often select a calendar year end (December) or the month preceding the decedent’s death with anticipation of using this as the fiscal year. However, even if the Form SS-4 was completed using a one of these year ends, the executor of the estate is not held to this and may select any year end that accommodates the needs of the estate.
Despite the benefits of a fiscal year election, sometimes a calendar year is more practical. If an estate is not well organized and holds mostly investment accounts, you can simplify the tax reporting by electing a calendar year and filing income tax returns from the tax documents (e.g. Form 1099′s) that are issued to the estate. This is particularly true if the decedent passed away early in the calendar year and there is not much opportunity for deferral.
So, the answer to your question is ... Yes ... As LONG as you satisfy the 12 month rule
Customer: replied 1 year ago.
according to the publication that I referenced. The 52-53week accounting period does not have to end on the last day of the month but it does qualify as a fiscal year. The 1041 instructions reference this document (if I'm not mistaken) hence the reason for my question. As stated on my original question I know that I can chose a period that does not exceed 12 months that end on the last day of a month. My understanding is that this means that an estate who's accounting period starts on any day in July would end on the 30th day in June not july which would leave the first days of July the following year excluded from the first year accounting period unless the accounting period happened to start on July 1. This is why I'm asking about the 52-53 week accounting period as it is titled in the publication referenced.
Customer: replied 1 year ago.
As further clarification. I know that I can select the first variety of a fiscal year. My question is- Is it acceptable for me to select the second variety of a fiscal year? The instructions do not exclude it by using language like "must". But it does not include it in the description either and it does reference the publication 538.
Expert:  Lane replied 1 year ago.

Again, yes, as you probably saw in the instructions, this is avilable for estates NOT trusts, and can be useful when the decedent dies in the last few days of a calendar year.

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This comes from IRC § 441(f)

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(a) In general

(1) Election. An eligible taxpayer may elect to compute its taxable income on the basis of a fiscal year that—

(i) Varies from 52 to 53 weeks;

(ii) Ends always on the same day of the week; and

(iii) Ends always on—

(A) Whatever date this same day of the week last occurs in a calendar month; or

(B) Whatever date this same day of the week falls that is the nearest to the last day of the calendar month.

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Also important here:

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(ii) Filing requirement. A taxpayer adopting a 52-53-week taxable year must file with its Federal income tax return for its first taxable year a statement containing the following information—

(A) The calendar month with reference to which the 52-53-week taxable year ends;

(B) The day of the week on which the 52-53-week taxable year always will end; and

(C) Whether the 52-53-week taxable year will always end on the date on which that day of the week last occurs in the calendar month, or on the date on which that day of the week falls that is nearest to the last day of that calendar month.

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Expert:  Lane replied 1 year ago.

Again, the 52-53 week period is prohibited for certain taxpayers (including trusts) *

*Reg §§ 1.441-1T(f)(1)(ii)(a), 1.441-1T(f)(2)

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So becasue this is NOT prohibited for estates, it appears that there is no reason why a fiscal year cannot be a 52-53 week annual accounting period*, and IS done in practice.

*Reg § 1.441-1T2T(a)

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See this:

https://www.law.cornell.edu/cfr/text/26/1.441-2

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Hope this has helped

.

Lane

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Expert:  Lane replied 1 year ago.

Did you see my answer?

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Again, yes the 52-53 week fiscal year IS allowed for estates (not trusts and certain other entities)

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There ARE (as you may already know) specific requirements for this election, along with a statement when filing that you will meet those specifics (such as "The day of the week on which the 52-53-week taxable year always will end," and others)

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All of the regs and tax code citations are in the answer above.

(What you will NOT see is a specific statment in the law that says that this is available, but the inference in ALL of the secondary sources and in practice is that it IS, by inference, becasue it is NOT disallowed.)

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Hope this helped.

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Lane

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If this HAS helped, I'd appreciate a positive rating, by clicking or touching, the smiles or stars on your screen ... that's the ONLY WAY I'm credited for the work here.

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