If you elect §645, it gives you the ability to have the trust on a fiscal year end as well, meaning only one tax return. One reason a fiscal year end could be beneficial is that it allows the trustee to make additional progress on the estate settlement before a tax return would be due.
Can you make a 645 election for an irrevocable trust?
The IRC § 645 election is irrevocable once made. The election must be made on IRS Form 8855 (Election to Treat a Qualified Revocable Trust as Part of an Estate) by the due date, including extensions, of the estate’s initial income tax return. Both the executor and the trustee must sign Form 8855.
What is a 645 election for a trust?
IRC §645 provides an irrevocable election to treat a qualified revocable trust as part of the decedent’s estate for federal income tax purposes. When the election is made by the executor and trustee, tax advantages available to an estate are available to the trust.
Who can make a 645 election?
The trustees of each qualified revocable trust (QRT) and the executor of the related estate, if any, use Form 8855 to make a section 645 election.
Can you file a late 645 election?
The §645 election is made on a timely filed initial estate income tax return. The election, if missed, cannot be made retroactively, and the IRS cannot (under current law) grant any relief for a missed §645 election.
What happens when 645 election expires?
Upon termination of the section 645 election, a former electing trust may need to obtain a new TIN. See § 301.6109-1(a)(4) of this chapter. If the related estate continues after the termination of the election period, the related estate must continue to use the TIN assigned to the estate during the election period.
What is a qualifying estate or trust?
A trust may be “qualified” or “non-qualified,” according to the IRS. A qualified plan carries certain tax benefits. To be qualified, a trust must be valid under state law and must have identifiable beneficiaries. In addition, the IRA trustee, custodian, or plan administrator must receive a copy of the trust instrument.
What is an IRS Section 645 election?
More In Forms and Instructions The trustees of each qualified revocable trust (QRT) and the executor of the related estate, if any, use this form to make a section 645 election. This election allows a QRT to be treated and taxed (for income tax purposes) as part of its related estate during the election period.
How long does a 645 election last?
two years
However this benefit is only available if the decedent’s estate is required to file an estate tax return. If a trust is part of a taxable estate that is not required to file an estate tax return, the 645 election is only effective for two years from the date of death.
What is an IRS 645 election?
Can estate elect to pay income tax?
When someone dies, their assets become property of their estate. Any income those assets generate is also part of the estate and may trigger the requirement to file an estate income tax return. The decedent and their estate are separate taxable entities.
