(1)
Form of return. The form
of the fiduciary return shall be prescribed by the director. It shall conform
as nearly as possible to the federal fiduciary return.
(2)
Required federal returns and
schedules. Nonresident estates with Iowa taxable income and trusts
with situs outside Iowa with Iowa taxable income must submit a copy of the
federal fiduciary return with the Iowa return. Estates of Iowa decedents and
trusts with a situs in Iowa must submit copies of the federal schedules that
substantiate gross income, deductions and ordinary and throwback distributions
to beneficiaries with the Iowa return.
(3)
Same form for nonresident estates
and foreign situs trusts. Nonresident estates and foreign situs trusts
shall use the same form for reporting Iowa taxable income as prescribed for
resident estates and trusts with a situs in Iowa.
(4)
Accounting period-tax
year. The initial fiduciary return may reflect either a calendar or
fiscal year accounting period, without the department's prior approval. If a
fiscal year is elected, it may end on the last day of any month, except
December, but in no case shall the fiscal year adopted be for a period longer
than the last day of the month preceding the decedent's death or the month the
trust was created. The accounting period for the purpose of the tax imposed by
Iowa Code section
422.6 must be the same
accounting period that is adopted for federal income tax purposes. This
limitation is equally applicable to estates of resident and nonresident
decedents and trusts with a situs within and without Iowa. If the taxpayer has
not adopted a taxable year prior to the time the return is due to be filed and
the tax paid, the taxable year is a calendar year until authorization is
granted to change to a fiscal year. See
26 U.S.C. Sections
441 to
443, federal regulations Sections
1.441 - 1(g)(3) and 1.442.2.
The permissible taxable years are illustrated by the
following examples:
Example 1. Decedent died July 4, 1990. The taxable year for
the estate commences the day after the decedent's death (July 5, 1990) and will
end December 31, 1990, if a calendar year is adopted as the taxable year. If a
fiscal year is adopted, it can end on July 31, 1990, or the last day of any
future month (except December 31, 1990), but no later than June 30, 1991,
subject to the condition that it is selected prior to the time the return and
payment are originally due.
Example 2. Grantor creates an irrevocable trust on July 27,
1989. On July 1, 1990, the trustee filed the initial fiduciary return of
income, adopting at that time a taxable year ending November 30, 1989. Since
the return was due March 17, 1990 (March 15 was a Saturday) for federal income
tax purposes and March 31, 1990, for Iowa income tax purposes, it is delinquent
and a fiscal year accounting period is disallowed and the trust taxable year is
the calendar year.
(5)
Short year returns. If an estate or trust is in existence only
a portion of the taxable year, a return must be filed for the partial year in
accordance with subrule 700.4(6).
(6)
Minimum filing
requirements.
a.
General
rule. A fiduciary return of income must be filed if the gross income
of the estate or trust for the taxable year is $600 or more, regardless of any
tax liability.
b.
Exception
to the general rule. A final fiduciary return of income must be filed
for the taxable year in which an estate or trust is closed, regardless of the
amount of gross income, if an income tax certificate of acquittance is
requested. The final fiduciary return of income constitutes an application for
an income tax certificate of acquittance pursuant to Iowa Code sections
422.27,
633.477 and
633.479. For a certificate of
acquittance to be received, the appropriate box on the final fiduciary return
must be checked to request the certificate.
(7)
Amended returns. An
amended return must be filed if there is a change in income or deductions that
results in a tax or additional tax due, or in a change in income, deductions or
credits distributable to a beneficiary. An amended return may be filed in lieu
of a claim for refund when a change in reportable income or deductions results
in a tax overpayment. See 701-subrules 305.3(8) and 305.3(15) for the period of
time for making a claim for a refund of excess tax paid.
(8)
Return due date. The
fiduciary return must be filed with the department and the tax due paid in full
on or before the last day of the fourth month following the end of the taxable
year. Payment of 90 percent of the tax due with the filing of a return will
grant a taxpayer a six-month automatic extension of time to pay the remaining
tax due. If the due date falls on a Saturday, Sunday, or holiday, the due date
is the next day that is not a Saturday, Sunday, or holiday as defined in Iowa
Code section
421.9A. Returns not timely filed
with 90 percent of the tax timely paid are subject to penalty as provided in
rule
701-700.6 (422).
(9)
Duties of the taxpayer.
a.
Income of the estate or
trust. A taxpayer must timely file a fiduciary return if the minimum
filing requirements specified in subrule 700.4(6) are met and must pay 90
percent of the tax due. Receipt of the return with 90 percent of the tax due
paid will result in an automatic six-month extension of time to pay the
remaining tax due. The department is not required to file a claim for taxes in
the estate proceedings and have the claim allowed before the tax is paid.
In re Estate of Oelwein, 217 Iowa 1137, 1141, 251 N.W. 694
(1933); Findley v. Taylor, 97 Iowa 420, 66 N.W. 744 (1896).
The personal representative of an estate must pay the tax on income from
property in the personal representative's possession, prior to applying the
income to estate obligations. See Iowa Code section
633.352.
b.
Decedent's final individual income
tax return. The executor, administrator, or other personal
representative of the decedent's estate must file an individual income tax
return for the decedent for the year of the decedent's death if the gross
income attributable to the decedent for the part of the taxable year ending
with death equals or exceeds the minimum filing requirements. See 701-subrules
301.1(1) to 301.1(3) and 301.1(5) for the minimum filing requirements for
individual income tax. If the surviving spouse of a decedent has not remarried
during the balance of the taxable year and has the same taxable year as the
decedent, the personal representative of the decedent's estate may file a joint
return with the surviving spouse for the taxable year of death. In the event of
such an election, the joint return must include the surviving spouse's income
for the entire taxable year and the decedent's income for the portion of the
taxable year ending with death. Income attributable to property owned by the
decedent and the decedent's rights to income received after the day of the
decedent's death are income of the decedent's estate or the persons succeeding
to the property or rights to income. See Iowa Code sections
633.350 to
633.353 for the circumstances
under which the estate is charged with the income from the decedent's property
or the decedent's rights to income. Income from property held by the decedent
and others in joint tenancy received after the decedent's death is charged to
the surviving joint tenants, not to the decedent's estate.
The final return for a decedent may be filed at any time
after the decedent's death, but in no event later than the last day of the
fourth month following the end of the decedent's normal taxable year. The final
income tax return of the decedent, if the minimum filing requirements are met,
must be filed prior to the time an income tax certificate of acquittance is
requested, even though this may require the early filing of the return.
Therefore, filing a joint return with the surviving spouse is precluded if the
decedent's final return is required to be filed prior to the end of the normal
taxable year.
c.
Decedent's prior year returns. The personal representative of
the decedent's estate is not limited to filing the decedent's final return and
paying the tax due. In addition, the personal representative has the duty to
file a return, if none was filed, and to pay any additional income tax owed by
the decedent that may become due by reason of an audit of the decedent's income
or prior year returns. The personal representative's duty to pay the tax, or
additional tax, is limited to the probate property subject to the jurisdiction
of the court. The probate property must be applied to the payment of the
decedent's tax liability according to the order for paying debts and charges
specified in Iowa Code section
633.425.
d.
Composite return
requirement. The personal representative of a decedent's estate and
the trustee of a trust are subject to the composite return filing and tax
payment obligations under Iowa Code section
422.16B and 701-Chapter 405 if
the estate or trust has nonresident beneficiaries.
e.
Beneficiary's share of income,
deductions and credits. After the final distribution of income for the
taxable year, but prior to the date for filing a beneficiary's individual
income tax return, the personal representative of an estate and the trustee of
a trust shall furnish each beneficiary receiving a distribution from an estate
or trust a written statement specifying the amount and types of income subject
to Iowa tax and the kinds and amounts of the deductions and credits against the
tax. A copy of the federal schedule K-1, Form 1041, adapted to reflect Iowa
taxable income, may be substituted in lieu of the statement.
f.
Liability of a personal
representative and trustee. A personal representative of a decedent's
estate and the trustee of a trust shall be personally liable for the amount of
Iowa composite tax required to be paid under Iowa Code section
422.16B and 701-Chapter 405 if
the composite tax liability attributable to a nonresident beneficiary is not
paid and, in addition, is personally liable for any penalty and interest due if
the tax is not paid to the department within the time prescribed by law.
This rule is intended to implement Iowa Code sections
422.6,
422.8,
422.16,
422.21,
422.23,
422.25,
422.27,
633.352 and
633.425.
