Thank you so much, MarkNYC, this is very clear and incredibly helpful.Two comments. First, technically I don't think an estate is "opened" on the date of death. Depending on the jurisdiction, it gets opened when a probate petition is filed, or when the will is accepted for probate. So depending on actual dates, your estate may not have been open for more than two years.I'm completing a First and FInal Form 1041 (and NJ Form 1041) for Estate Income Tax for an Estate that closed in 2023 (using Calendar Year). The decedent died in August 2021, the only Estate asset (house) sold in September 2023. The assets were distributed in October 2023. The Estate was therefore open for more 2 years.
One must Attach a Statement with an explanation to the Form 1041 if the Estate is open for more than 2 years
Beyond that, the 1041 states that a box should be checked and an explanation provided if the estate "has been open for more than 2 years." I am not a lawyer or linguist but I think a reasonable interpretation of the quoted phrase is that the estate was opened more than 2 years ago AND REMAINS OPEN. For an estate that was closed during the year, the IRS does not care why it took more than 2 years to close. But the IRS does want to know why an estate open for more than 2 years has not yet been closed. Since your estate was closed in 2023 prior to the filing of the tax return, I think it's proper to not check the box or be required to provide an explanation. And in your situation, where a 2023 estate income tax return is being filed as a first and final return for a decedent who died in 2021, the chances of the IRS questioning your answer to the "2-year" issue is close to zero.
Date of death was August 31, 2021. The will was accepted for probate on September 27, 2021. The house sold on September 6, 2023, and all Estate income transferred to the Executor/sole Beneficiary on October 11, 2023. So everything was completed 2 years and 2 weeks after the will was accepted to probate.
The Federal 1041 does not ask for a "date" the Estate closed, beyond designating calendar year vs. some other time frame. The NJ 1041 does ask for a specific date the Estate closed. It seems simplest to say the Estate closed December 31, 2023, unless there is some compelling reason to do otherwise.
Your reading of "has been open for more than 2 years" seems quite reasonable. I am thrilled you think it is proper to not check the box or be required to provide an explanation. It makes a lot of sense. This then allows me to e-file both 1041s, which makes me inordinately happy!
Statistics: Posted by LK2012 — Thu Apr 04, 2024 12:13 am — Replies 4 — Views 395