Form 1041-A: Reporting Trust Charitable Accumulation Amounts, IRC 642(c) Deduction Requirements

Calculating Set-Asides, Recognizing Eligible Income Deductions, and Identifying Principal Distributions

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, February 20, 2018

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax advisers to trusts and fiduciaries with detailed practical guidance for completing IRS Form 1041-A, U.S. Information Return Trust Accumulation of Charitable Amounts. The panel will discuss the intersection between Form 5227 and 1041-A, detail trusts that are required to file the information return, and address common traps for preparers.

Description

A complex challenge for fiduciary tax advisers is navigating the calculation and filing challenges of IRS Form 1041-A, U.S. Information Return Trust Accumulation of Charitable Amounts. Any trust that is not a split-interest trust defined Sec. 4947(a)(2) which claims a charitable income tax deduction under Sec. 642(c) must also file Form 1041-A. The regulations include costly tax penalties for failure to report charitable accumulations amounts.

The rules governing tax treatment of trust distributions to charitable organizations differ from that of distributions to beneficiaries. The default treatment of beneficiary payments is to consider the distributions as coming out of distributable net income (DNI). In contrast, a complex trust must trace the income when making a distribution to a charitable organization to determine whether it qualifies for a charitable deduction under the terms of IRC 642(c).

The Form 1041-A filing requirement applies not only to direct charitable distributions by a trust but also to the trust’s share of any charitable contributions made by partnerships or S corporations in which the trust has an ownership interest. Tax advisers must be diligent in tracing trust accumulations and pass-through charitable contributions to avoid adverse tax consequences.

Listen as our experienced panel provides a practical and detailed guide to completing Form 1041-A, including identifying filing requirements, income sourcing challenges and accumulation calculations.

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Outline

  1. IRC 642(c) charitable deduction rules
  2. Contrasting DNI rules with charitable distribution income sourcing
  3. Form 1041-A: section-by-section
    1. Income and deductions
    2. Distributions of income set aside for charitable purposes
    3. Distributions of principal for charitable purposes
  4. Filing requirements for trusts owning shares in partnerships or S corporations
  5. Planning opportunities and documentation requirements

Benefits

The panel will discuss these and other important topics:

  • How to identify whether a trust needs to file Form 1041-A
  • IRC 642(c) income sourcing rules to determine whether a contribution is made from income
  • Calculating set-asides and distributions from amounts which have previously qualified for charitable deduction
  • Interrelation between Form 1041-A and Form 5227

Faculty

Fletcher, Eric
Eric S. Fletcher, CPA

Principal
Thompson Greenspon

Mr. Fletcher has more than 20 years of public accounting experience and focuses his practice on working with...  |  Read More

McLucas, Charles
Charles J. McLucas, Jr., CPA, PFS

Founder
Charitable Trust Administrators

Mr. McLucas focuses on charitable trust administration work and estate planning for high net worth individuals. He and...  |  Read More

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