Do I have to file a fed and CA state return or 1041 for 2023?

[Rdrake1968]

My mother passed away 12/27/22. In early February 2023 I realized my mom’s trust attorney had not put her home in the revocable trust, (middle of covid is the excuse)  I hired a estate attorney who filed a hegstad petition and I got it approved in October 2023, and the deed was put back in the trust and recorded this January 2024. 

There are 3 trustees (my 2 sisters & I) and 3 beneficiaries ( my 2 sisters and I).

My question is: Do I need to file an Estate and or trust return if my mom's home didn't generate any income in 2023? 

I just paid the mortgage and bills and didn't distribute any monies to beneficiaries as it was in probate (so to speak). My Parents were hoarders and all 3 of us have been discarding garbage and giving items to donation.

I did her final return for 2022 in March 2023 and I have an EIN # 

the plan is to have estate sale and sell home this year 2024 and then so the final trust return.

Home in San Jose, ca

Thank You

[DMarkM1 · Accepted solution]

According to the form 1041 Instructions, extracted below, if there was no income for the tax year then you do not have a filing requirement.  

A trust taxable under section 641 is one with "...taxable income of estates or of any kind of property held in trust, including income received by estates of deceased persons during the period of administration or settlement of the estate..." 

"The fiduciary (or one of the joint fiduciaries) must file Form 1041 for a domestic trust taxable under section 641 that has:

• Any taxable income for the tax year;
• Gross income of $600 or more (regardless of taxable income);
• A beneficiary who is a nonresident alien; or
• If you held a qualified investment in a QOF at any time during the year, you must file your return with Form 8997 attached. See the Form 8997 instructions."

[Rdrake1968]

Thank you, I had read that as well.

There was something to the effect of what you stated, but, also  said, or california resident, and that is where  I questioned it.

[swarts1]

Have similar situation as "Negative Accounting income on final trust return" with K-1's showing different amounts on line 14 of Federal (1041) and State/CA (541)  https://ttlc.intuit.com/community/business-taxes/discussion/negative-accounting-income-on-f[product ...

On the Trust side, I have answered yes to the question was all the trust income distributed and found below differences.   This is the final return for a complex trust.  Parents home was sold in Feb2023 and all proceeds from the sale were distributed to beneficiaries (5) in Mar2023, no personal use, the home was vacant from Feb2022 (DOD) to Feb2023.  Accounting income is negative due to 1) step up basis plus major >5year improvements (water heater, duct work, insulation, drywall), excluding costs for other repairs and cleanup  2) selling expenses and 3) supplemental county taxes paid after closing for that one year period based on new assessed tax value.  The net of which is being transferred via K1's to beneficiaries for both Federal (1041) and CA/State (541).   The differences I see between Federal and State k1's, Federal k1 has line 14 "Other Information" with 20% (5 beneficiaries) of the Income Distribution Deduction from the 1041, not on the 541.  While on the State/CA k1 line 14d "Other information" shows "TOTAL GROSS RECEIPTS", a huge amount from the home sale (Proceed amount less Selling Expense/5 beneficiaries), so there is a mismatch here.  This is pass through cash from the home sale.  Shouldn't these amounts match and be in agreement?  If so why don't they match, if they should not match, why not?

On the beneficiary side, I've entered K-1 numbers on the federal side where apparently the federal k1 is simply transferred to the State/CA return  but I do not see line 14 on the State K1.