For other Form 1041 tutorials, see our playlist:    • Playlist  

Certain trusts and estates can make an IRC Section 663(b) election to accelerate the inclusion of distributions.

If a trustee makes a distribution to a beneficiary within 65 days of the start of the tax year, an election can be made to record the distribution in the prior period. The election is recorded on IRS Form 1041 in the "Other Information" section.

This election is often beneficial because it records more income on the tax return of the beneficiary versus the trusts. The income beneficiaries generally have more favorable marginal tax brackets and greater deductions over the trust, so it results in an overall lower effective tax burden for the year.

The election is not always the right decision, as careful consideration must be given to the effective tax rates in the prior and current period.

For a larger database of tutorials, please visit our website and search for your question:
https://knottlearning.com/

DISCLAIMER: The information provided in this video may contain information about tax, financial, and legal topics. Such materials are for informational purposes only and may not reflect the most current developments. These informational materials are not intended and should not be taken as tax, financial, or legal advice. You should contact an advisor to discuss your specific facts and circumstances. Selfhelp services may not be permitted in all states or jurisdictions. The use of these materials does not create an attorneyclient or confidential relationship. This video does not include information about every topic or issue related to these informational materials.

#IRS #Form1041 #1041 #taxation