Well, a §645 election allows the executor of an estate and the trustee of a revocable trust to elect to treat the estate and the trust as one for tax purposes. Generally, estates have the ability to elect a fiscal year end or a calendar year end, whereas trusts default to a calendar year end.

Can you make a 645 election for an irrevocable trust?

(1) Effect of election. The section 645 election once made is irrevocable. (i) Tax treatment of the combined electing trust and related estate. If there is an executor, the electing trust is treated, during the election period, as part of the related estate for all purposes of subtitle A of the Internal Revenue Code.

When can a 645 election be made?

The §645 election must be made on 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. Or, if there is no personal representative, for the first taxable year of the trust filing as an estate.

What is a 645 election trust?

The substance of section 645 is that the trustee of a trust that was revocable by the decedent on the date of his or her death may elect to treat the trust as part of the decedent’s probate estate for income tax purposes, provided that certain conditions are met.

What is a qualifying estate or trust?

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. If a qualified trust is not structured correctly, disbursements are taxable by the IRS.

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.

How is a trust taxed under § 645?

If the election is made, trust income and expenses will be reported by the estate on the estate’s income tax return, and the trust will be treated as part of the estate. Only one Form 1041 (for the estate) is required if the § 645 election is made, even though legally, the trust, rather than the estate, continues to hold the assets.

When to use form 8855 for qualified revocable trust?

Form 8855 is used to make a section 645 election, which election allows a qualified revocable trust to be treated and taxed (for income tax purposes) as part of its related estate during the election period.

Do you have to file a Form 1041 for an estate?

Only one Form 1041 (for the estate) is required if the § 645 election is made, even though legally, the trust, rather than the estate, continues to hold the assets. Certainly, the income and expenses of the estate continue to be reported by the estate on the estate’s income tax return.

How to elect a qualified revocable trust ( QRT )?

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. A taxpayer identification number must be obtained by both the electing QRT and the related estate. Both the executor and the trustee must sign Form 8855.