Estate Trust account for deseased parents. Returns filed for ’22 for both deceased, plus Trust account. Trust shows loss for ‘23. Do we file State of Fed return?

[gosluggo-]

Parents both died in ’22. Estate/Trust will be settled in June this year.

[DavidD66]

Is there a Trust in addition to the estates of your parents?  If you are talking about your parents' estates, you are required to file an estate income tax return using Form 1041 for the estate if it generates $600 or more in annual gross income. Estate income is typically generated from earnings from assets such as stocks, bonds, savings accounts, rental property or even a paycheck deposited into the deceased’s bank account after their death.  If there is a trust in addition to the estates, what kind of trust is it?  

[gosluggo-]

Thank you. There was a Living Trust (a brokerage account at Morgan Stanley) that is now managed by my wife and brother as co-trustees. All other assets have been distributed. For that account, we show a paper loss for 2023 of about $11K as we sold off stocks that were losing money after the step up to raise cash. Some of those funds were used for estate costs, other cash was distributed to beneficiaries as needed.  Remaining assests will be split by June and the Trust account taken down to $0. Also in 2023, there were no outside sources of money going into the Trust account, only dividens from stocks or ETSs. Since the account shows no “gain” over $600 for 2023, do we need to file Fed or State return? 

[M-MTax]

Since the account shows no “gain” over $600 for 2023, do we need to file Fed or State return? 

You need to file a return if the trust had any taxable income.

[DianeW777]

An estate return for federal purposes is not required to be filed if the total taxable income is not more than $600.  It's not clear from your statement if  the amount for 2023 is lower than that amount, based on your question. If sales of investments were greater than $600 then as indicated by M-MTax a return is required to be filed.  It's the executor's responsibility to show the net results of any sales or expense reduction of any income. You should file the return and mark it final.

@gosluggo-

[Edited: 03/30/2024 | 2:52 PM PST]