2.3.5 Flexibility as to Tax Year/ Estimated Tax Payments
220.127.116.11 Estates (but not trusts) may elect to use a fiscal year. Trusts must use calendar years. I.R.C. Sec. 645.
18.104.22.168.1 “This fiscal-year election may be extremely important if the estate is expecting a large lump sum of income. The personal representative could elect a taxable year ending on the last day of the month preceding receipt of the lump sum income. Thus, the estate would have approximately sixteen months of deferral before income tax on the lump sum income would need to be paid.” Altman, “A Will is still the Way,” 23 Beverly Hills Bar Journal 460, 465 (Summer 1989).
22.214.171.124 Under I.R.C. Sec. 6654(1), estates (but not all trusts) are exempt from making estimated tax payments for taxable years ending within two years of the decedent’s death.
126.96.36.199.1 Grantor trusts where the decedent was the deemed “owner” qualify for the two year relief from paying estimated taxes if (i) the residuary estate pours over to the trust, or (ii) the trust is primarily responsible for paying debts, taxes and expenses of administration and no will has been admitted to probate. I.R.C. Sec. 6654(1)(2)(B).