May 2005
Volume 1, Number 3
Table of Contents

Taxation
Checklist For Fiduciary Income Tax Pick-Ups
By Jonathan G. Blattmachr and Arthur M. Michaelson

Estate of: ____________________________________

Tax Periods: _________________________________

1. Are administration expenses duplicated on the 1041 and 706?
__Yes __ No __N/A

2. Are broker's commissions deducted from the proceeds of sale (or as an adjustment to basis) on the form 1041 schedule D?
__Yes __ No __N/A

a. If yes, are they also deducted on the 706?
__Yes __ No __N/A

3. Is the estate deducting expenses or reporting income attributable to property that was specifically bequeathed or jointly owned?
__Yes __ No __N/A

4. If an adjustment to the value of property has been made on the 706, has a corresponding adjustment been made to the basis of the property for purposes of sale or depreciation?
__Yes __ No __N/A

5. If the estate has sold or liquidated property, were sufficient steps taken by the decedent before death so that the proceeds of sale or liquidation are IRD?
__Yes __ No __N/A

a. If yes, was the decedent's basis before death and not the value per the 706 used on the 1041?
__Yes __ No __N/A

6. Did the estate make a distribution of capital gains (on other than the sale of unproductive assets or natural resources)?
__Yes __ No __N/A

7. Has the estate received the following items or IRD:
__Yes __ No __N/A

a. salary, fees, compensation, alimony?
__Yes __ No __N/A

b. accrued dividends and interest?
__Yes __ No __N/A

c. increment on U.S. Savings Bonds?
__Yes __ No __N/A

d. accrued interest on flower bonds?
__Yes __ No __N/A

e. royalty income?
__Yes __ No __N/A

f. death benefits?
__Yes __ No __N/A

g. mortgages or note receivables of an installment obligation?
__Yes __ No __N/A

If yes, were these items reported on both the 706 and 1041?
__Yes __ No __N/A

8. If the decedent was a partner and he died before the end of the partnership's taxable year, has the estate allocated the income between the IRD portion and the non-IRD portion?
__Yes __ No __N/A

9. Pecuniary Bequests: Were they funded with items of appreciated property, including such IRD items as installment obligations?
__Yes __ No __N/A

10. Fractional Bequests: Has there been a non-pro rata funding of this bequest among the several beneficiaries?
__Yes __ No __N/A

11. Has there been a sale, transfer, or cancellation of an installment obligation received from the decedent?
__Yes __ No __N/A

12. In computing the estate tax deduction (691c), has an adjustment been made for:
__Yes __ No __N/A

a. DRD items (691b)?
__Yes __ No __N/A

b. the § 1202 deduction?
__Yes __ No __N/A

c. the martial and charitable deductions?
__Yes __ No __N/A

d. the allocation between estate and beneficiaries?
__Yes __ No __N/A

13. Charitable Deduction: Is it authorized under the governing instrument (e.g., decedent's will) for an exclusive charitable purpose?
__Yes __ No __N/A

14. Was an income distribution deduction taken for a distribution to beneficiaries of a trust under the decedent's will by the Estate?
__Yes __ No __N/A

(By-Pass Distribution)

15. Was an income distribution deduction taken for a distribution to a split-interest charitable trust?
__Yes __ No __N/A

16. Was there a 1041 pick-up?
__Yes __ No __N/A

Caution: An affirmative answer to questions 1, 2a, 3, 6, 9, 10, 11, 14, or 15; or a negative answer to questions 4, 5a, 7a, 8, 12, or 13 indicate that you will have a possible audit issue.

Copr. (C) 2005 West, a Thomson business. No claim to orig. U.S. govt. works. This article is reprinted with permission from West, a primary sponsor of the General Practice, Solo and Small Firm Division.

 

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