TT Business isn't letting me uncheck the "Complex trust" box.

[turbler]

I'm using TurboTax Business to prepare a 1041 for a trust that made the 645 election.

The Item A instructions say to check all the boxes that apply, so I initially checked both the "Complex trust" box and the "Decedent's estate" box.

TurboTax has flagged that as an error, and I'm now trying to uncheck the "Complex trust" box, but TurboTax isn't letting me do that. It seems to only be willing to uncheck the "Complex trust" box if I check one of the other trust-type boxes.

What do I need to do to have *only* the "Decedent's estate" box be checked?

[Anonymous_]

You need to initially select that the entity for which you are filing is an estate due to the 645 election.

Thereafter, check the box in Item G and enter the trust's EIN.

See https://www.irs.gov/instructions/i1041#en_US_2022_publink10004342

[turbler]

Thanks, but I'd already tried that. If I rewind to the extent of unchecking the Item G box and deleting the EIN there, and then go back up and try to uncheck the "Complex trust" box, TurboTax still won't let me uncheck that box.

I can uncheck the "Decedent's estate" box, but not the "Complex trust" box.

[Anonymous_]

I understand, but I meant that you should most likely start over and indicate that the entity is an estate. 

If you made a 645 election, the electing trust files as part of the estate and checks the box (Item G) and the EIN of the trust is entered.

[turbler]

By "start over," do you mean somehow blank out some or all of the existing entries and restart the Step-by-Step?

How do I start over?

[Anonymous_]

If you made a 645 election, then you should be preparing a return for the estate. The electing trust is shown in Item G with its name and EIN.

If you started the return indicating it was a trust, you most likely need to start over and indicate the 1041 is for an estate (with an electing trust, of course).

[turbler]

This is a case where all the assets were in the trust, so there's no separate estate, and no executor. To quote the IRS instructions, this is a 1041 filed by a trust "as if it were an estate."

It's a common scenario, because the main reason a lot of these trusts get set up is to avoid the hassles and expense of a probate proceeding.

Trustees often make the 645 election in these cases because it results in more favorable tax treatment in several ways (e.g., a $600 exemption, rather than a $100 exemption).

If I "start over" with a whole new return, is there any way I can end up importing any of the information, worksheets or forms from the one that's otherwise basically ready to file (but for that one checkbox)?

[Anonymous_]

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@turbler wrote:

To quote the IRS instructions, this is a 1041 filed by a trust "as if it were an estate."

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There is always an estate, as it is simply the net worth of a decedent (which can even be negative), and the instructions (as well as Section 645 and the Regs) provide for a qualifying trust to be treated as part of the estate, not "as if it were an estate".

The 1041 needs to be filed in accordance with the foregoing which is as an estate with a qualifying trust. 

[Anonymous_]

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@turbler wrote:

What do I need to do to have *only* the "Decedent's estate" box be checked?

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Here is the bottom line if you want to get that result; you need to do a hard override and uncheck the "Complex trust" box (e.g., right-click with the cursor in the complex trust box, select "Override" from the dropdown, and uncheck the box).

[turbler]

On the "hard override" of the checked "Complex trust" box, I'd already tried that, and TurboTax won't let me uncheck the box that way either.

On the issue of whether the IRS considers that there's "always an estate," that's actually inconsistent with the 1041 instructions. My quote about the trust filing "as if it were an estate" is straight from those instructions.

And if you look at the discussion of the "Election period" on page 5 of the 2022 instructions, you'll see that the first bullet point points to "the day on which the electing trust and related estate, if any, distribute all of their assets."

I don't see how "if any" could have any meaning in that context if it isn't referring to a scenario where there isn't any "related estate" -- i.e., a scenario where all the assets are in the trust.

And that's the scenario where, rather than the 645 election causing the trust to be *combined" with an estate (and where the executor, rather than the trustee, files the return for what the IRS regs call the "combined entity"), the electing trustee files the return (again, quoting the IRS) "as if it were an estate."

A semantic argument in the end, really. I just wish the TurboTax Step-by-Step didn't steer a trustee in my situation into making a wrong choice (per TurboTax) right up front that can't be corrected later, after they've put a lot of time into preparing the return.

After you select "Trust or Estate return" in the Step-by-Step and provide your first name, the next screen asks, "Do You Need to Take Care of a Trust or Estate?" And the two choices are:

--A trust. This will say "trust" in the title of the document.
--An estate. This is for someone who passed away. There may be a will.

I chose "trust," obviously. But I've now discovered that if you choose "estate," there are several screens about the decedent and EIN, and then a screen that asks, "Are You the Executor of the Estate?"

And if you say, "No," a new question pops up that asks, "Who is the executor?" (with boxes for the first and last name).

Needless to say, a trustee in my situation can't answer that question, because there is no executor.

And probably needless to say, these screens are not unlikely to lead the trustee of an electing trust (in a no-executor case) to think that making the "trust" choice up front is the correct approach at this stage of the Step-by-Step.

And again, once that choice is made, it apparently can't be undone at any later point, which creates a not insignificant risk that the trustee will end up spending a lot of time on the return and then have to start over.

*sighs*

Not your fault, of course, and I appreciate your input. If some other technique for unchecking the "Complex trust" box occurs to you, please let me know.

[Anonymous_]

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@turbler wrote:

Needless to say, a trustee in my situation can't answer that question, because there is no executor.

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You are correct about the aforementioned, but it is a TurboTax issue as the actual Form 1041 requires the name of the fiduciary (which, of course, can either be a trustee or an executor/administrator). Ultimately, the "executor question" matters little since the name that is input winds up on the same line of the 1041.

Regardless, the return does need to be filed as if it were an estate and that is contained in the instructions and the relevant Reg. (Section 1.645-1). You are also correct about semantics as there might not technically be an "estate" for federal income tax purposes but, regardless, Section 645 and the Regs permit the another entity (i.e., a QRT) to be treated as one (again, a matter of semantics).

If there isn't an executor. If no executor has been appointed for the related estate, the trustee of the electing trust files Form 1041 as if it were an estate. File using the TIN that the QRT obtained after the death of the decedent. The trustee can choose a fiscal year as the trust's tax year during the election period. Be sure to check the Decedent's estate box at the top of Form 1041 and item G if the filing trust has made a section 645 election.

[Anonymous_]

My prior post notwithstanding, I am still exploring a way to uncheck the box in question.

For whatever reason, I was able to do so on my test return with an override (and I have made several attempts with the same result). I am simply uncertain as to why this does not work for you.

EDIT: I have tried numerous combinations and permutations and the override has worked in every instance. If you want to try this, you can easily start a new (test) return and see if you can check and then uncheck the boxes in order to determine whether the inability is unique to the return you prepared (somehow).

[dominarofaction]

I'm late to the party, but I was having the same problem as the original poster.  I had already input all of my data, only to find that TT Premier wasn't recognizing me as trustee of a QRT for purposes of the $600 exemption and the passive loss rules (only individuals, estates and QRTs can "actively participate" in an activity for this purposes).  My only choices for "entity type" were simple/complex/grantor trust.  I initially checked "complex" trust because it was the best fit, but when I went back and checked the "estate" box per the instructions, I couldn't uncheck "complex trust."  Spent about 35 min on the phone with TT assistance, without success. 

But thanks to this thread, I was finally able to do a hard override and uncheck the complex trust selection, which cleared all the errors.  So, thanks! 

As an aside, this programming bug has apparently existed since at least 2021, but I guess it's not important enough for TT to fix.  I have to wonder how many people have filed incorrectly because they don't know any better?