How to distribute excess tax payments — 2014

Trusts have the option (under IRC §643(g)) to treat any portion of a Federal payment of estimated tax made by a trust for any taxable year as a payment made by a beneficiary of the trust. The election to allocate must be made on or before the 65th day after the end of the tax year by filing Form 1041-T.

March 6

(The 65th day of 2014 is March 6. See related post here.)

The amount is treated as paid by the beneficiary on January 15 of the following tax year (for the purposes of calculating underpayment of estimated taxes); by making an election now, the tax will be treated as paid on January 15, 2014, and can be taken by the beneficiary as a credit against 2013 taxes.

This election may also be made by an estate, but only in its last taxable year.

This election may be useful for trusts which unexpectedly have little or no tax liability last year, or after distributions were made causing the tax liability to shift from the trust to the beneficiary.

New York allows a similar election with regards to NYS estimated tax payments made. The election and allocation must be made on Form IT-205-T. This form must be filed within 65 days of a trust’s year end (just like the Federal election).

Citation: IRC §643(g)

Will New York Soon Have a Gift Tax?

Governor Cuomo’s recent budget proposal for New York incorporated some tax proposals made by two separate blue-ribbon panel.

A recent post by John D. Dadakis (a Partner at Holland & Knight in New York), explores the Governor’s proposal.

New York Gift Tax Changes Imminent? | Estate Planning content from


It seems reasonable to think that Governor Cuomo would not have made any proposals in his budget which he didn’t think that a reasonable chance of becoming legislation. Time will tell, but not too much time since New York’s budget is due April 1, 2014. New York has had 3 years running of on-time budgets; expect the trend to continue.

Rubin on DING Trusts

Chuck Rubin has a great post on his blog about DING Trusts:

The post doesn’t mention the PLRs issued earlier this year (PLR 201310002-201310006) which “blessed” the use of DINGs. Here is an ACTEC article on these PLRs:

Tax Return Due Dates (2013)

April 15

Fiduciary income tax returns are generally due on the 15th day of the 4th month after the end of the tax year [IRC §6072(a)]. For trusts and calendar year estates, that date is April 15th.

In the previous two years, the filing deadline was pushed back due to the April 15th deadline falling on a weekend or a holiday. This year, the due date is a Monday.

Fiduciaries who are unable to complete an income tax return by April 15th can apply for an automatic extension for five additional months to complete the return; the extended returns will be due September 16th this year, because September 15th is a Sunday.