My brother died on May 27, 2016. I got an EIN for his estate. The SS-4 says I must file a 1041 by 4-15-2017. Can I elect a different fiscal year end for the estate?

[a_baxley]

If I can elect a fiscal year of July 1 - June 30, then I have 3 1/2 months after that to file the 1041. I'd like more time. 

[GeoffreyG · Accepted solution]

Please let us first express our condolences on the passing of your brother.  You have our sympathies.

The answer to your tax question is certainly, yes.  As the executor or personal representative of an estate, you may elect any fiscal year-end you wish, for the Form 1041 Estate income tax return, provided that it ends on the last day of the month and does not exceed a total of (12) months in length.

How do you do this?  Well, the election of a fiscal year-end is made through the filing of the initial estate income tax return, on Page 1 of Form 1041 itself.  As you very correctly point out in your question, the Form 1041 tax return is due three months and 15 days after the elected year-end, so it is important to address this election early in the administrative process.

However, even if the attorney or accountant (or you, as the estate's representative) prepared the SS-4 (application for Employer Identification Number, or EIN) and filed it originally with a December 31st fiscal year-end in mind, you can still now make a different fiscal year-end election, at the time you file the initial Form 1041.

In other words, the executor of the estate is not held to or bound by the fiscal year-end date indicated on the original SS-4 application.  Thus, you may select any year-end that you like and that accommodates the needs of the estate.  Choosing July 1 through June 30, where a DOD was in the month of May, seems like a perfectly reasonable and normal. period.

Thank you for asking this important question, and once again we are sorry for your family's loss.

[a_baxley]

Thank you so much!!! Your response does align with all the research I have done. Thank you for your expressions of sympathy as well. Very much appreciated.

[GeoffreyG]

Dear a_baxley:

You are very welcome for the answer, and thank you for your kind words.  We are glad that we could help you, especially during this difficult time.

[myrmidion77]

I am trying to understand if,  say for example someone dies in july and they chose the december designation i can still file the 1041 after the april 15th deadline?

[dmertz]

The executor or personal representative, not the decedent, chooses the end date of the estate's income tax year such that the end date is not more than one year after the date of receipt of the estate's first reportable income.

The regular filing deadline is the 15th day of the 4th month following the end of the estate's income tax year.  For an estate income tax year ending on December 31, the regular filing deadline is April 15 of the following year.  If done by the regular deadline, an automatic 5½ month extension can be requested.  This would extend the deadline from April 15 to September 30.  The estate's fiscal income tax year is not established until the first estate income tax return is filed.

Any estate tax return required to be filed must be filed, even if it is filed late.  Late filing can result in a late-filing penalty and interest.

[GeneralLedger2]

I have been trying to research this question about electing a FYE for Estates and cannot find anything definitive.  The question is: What is considered the "initial" year return.  I often have situations that don't require a tax return for several years until a piece of real estate is sold.  So, for example, if the DOD is say, 4/25/2018 but a return is not required until something is sold on, say, 7/15/2020, can I elect an FYE 3/31/21 since no return would be required for FYE 3/31/19 or 3/31/20?

[DianeW777]

Yes, you can choose to adopt a fiscal year (FY) accounting period for the estate. As a rule,  the estate calendar year starts on the day of the estate owner's death and ends on Dec. 31 of the same year. The executor, however, can file an election to choose a fiscal year, which means the tax year ends on the last day of the month before the one year anniversary of death.

Tax Year Adoption, Change, or Retention - Form 1128

• To request a ruling to adopt, change, or retain a tax year, file Form 1128 by the due date (not including extensions) of the federal income tax return for the first effective year. Do not file earlier than the day following the end of the first effective year. In the case of a change in tax year, the first effective year is the short period required to effect the change.

• IRS Instructions Form 1128

Also you would list the last day of your FY on the Form SS-4, used to apply for the employer identification number (EIN) of the estate. This can be obtained online in minutes.  

• IRS EIN / Tax ID Application

@GeneralLedger2

[GeneralLedger2]

I may be paranoid but, the distinction I'm trying to make is that there was no return due based on a FYE on the one year anniversary of the month before the DOD; there wasn't a return due until 3 years after the anniversary of the month before the DOD.  Since no return had to be filed for the 1 and 2 years after that anniversary date, can I still elect a FYE since that is the initial required return?