Declarations of estimated tax

# A.

Requirement.

# 1.

If the estimated tax is greater than $150, the fiduciary shall make a declaration of estimated tax for (i) any taxable year of an estate which ends two or more years after the date of death of the decedent; and (ii) every taxable year of a trust.

# 2.

Examples.

a. Decedent A died on September 1, 1986. For the taxable year 1988 the executor of A's estate expects to receive $10,000 income which will not be used to meet administrative expenses or distributed to the beneficiaries. The executor must file a declaration because the fiduciary income tax due on $10,000 will exceed $150 and the end of the taxable year, December 31, 1988, is more than two years after the date of death of the decedent.

b. The ABC trust expects to receive $10,000 income in 1988 but under the terms of the trust instrument the trustee is required to distribute all income to the beneficiaries. No declaration is required because the trustee's fiduciary income tax liability will be zero.

c. Same facts as in example b except that the beneficiaries are minors. The trustee may accumulate income during the minority of the beneficiaries, and anticipates doing so. The trustee must file a declaration because the trustee's fiduciary income tax on $10,000 will exceed $150.

# B.

Contents. The declaration shall state the amount which the fiduciary reasonably estimates is the income tax for which the estate or trust will be liable for the taxable year.

# C.

Time for filing.

# 1.

If the requirements of subsection A are met on or before April 15, then the fiduciary shall file the declaration on or before May 1 of the taxable year.

# 2.

If the requirements of subsection A are met for the first time after April 15 and before June 2, then the fiduciary shall file the declaration on or before June 15 of the taxable year.

# 3.

If the requirements of subsection A are met for the first time after June 1 and before September 2, then the fiduciary shall file the declaration on or before September 15 of the taxable year.

# 4.

If the requirements of subsection A are met for the first time after September 1 of the taxable year, then the fiduciary shall file the declaration on or before January 15 of the succeeding year.

# 5.

If the estate or trust has a taxable year other than a calendar year then the declaration shall be due on the fifteenth day of the fourth, sixth, or ninth month of the taxable year or on the fifteenth day of the first month of the succeeding taxable year, as appropriate.

# 6.

Examples.

a. On April 15, 1988, the fiduciary of the ABC trust expects to receive $25,000 income in 1988. Under the terms of the trust instrument the fiduciary is required to distribute all income to adult beneficiaries, but may accumulate the income of a minor beneficiary. There are two adult beneficiaries and no minor beneficiaries. No declaration is required because the trust's estimated tax liability is zero.

b. Same facts as in example a except that as a result of the death of one of the beneficiaries on August 1, 1988, a minor has become a beneficiary and the fiduciary anticipates accumulating the income of the minor. The minor's share of income for the remaining five months of the taxable year will be ½ of 5/12 of $25,000 or $5,208. The trust's estimated tax on $5,208 is more than $150, therefore, a declaration must be filed on or before September 15, 1988.

# D.

Amendments. A fiduciary may amend a declaration at any time throughout the year by increasing or decreasing the amount of any installment payment of estimated tax and reporting the changed amount on the payment-voucher form accompanying the installment payment.

# E.

Return as declaration or payment.

# 1.

If on or before March 1 of the succeeding taxable year a fiduciary files the return for the estate or trust for the taxable year for which a declaration is required under subsection A, and pays the full amount of the tax shown to be due on the return:

a. Such return shall be considered as the declaration if no declaration was required to be filed during the taxable year, but is otherwise required to be filed on or before January 15; and

b. Such return and payment shall be considered as the last installment payment of estimated tax which would otherwise have been payable on or before January 15.

# 2.

Filing a return on or before March 1 of the succeeding taxable year or filing a declaration or payment of the last installment on January 15 will not relieve a taxpayer of liability for additions to tax for underpayment of any of the installments of estimated tax that were due on May 1, June 15, or September 15 of the taxable year.

# F.

Short taxable year.

# 1.

A declaration must be filed if a return is required for a period of less than 12 months, unless the short period is less than four months or if the requirements of subsection A are first met after the first day of the last month in the short taxable period.

# 2.

For the purpose of determining whether the estimated tax exceeds $150, the estimated tax for the short taxable period shall be placed on an annual basis by multiplying the estimated tax for the short taxable period by 12 and dividing the result by the number of months in the short taxable period.