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Bankruptcy Estate Tax Return
Sent to Tax Experts May 20 12:13 PM

Is the tax rate for a trustee filing a bankruptcy estate tax return alwasy "married filing separately" IRS publication 908 or may they also be subject to the alternative minimum tax??

Customer (name blocked for privacy)
Status:  Closed   Value: $5
Info Request
May 20 5:46 PM (5 hours and 33 minutes and 31 seconds later)
         
REPLIED to Info RequestCheck Mark
Are you talkingabout the return you personally file or a separate return you are filing for the bankruptcy estate?  Under which section are you filing for bankruptcy (i.e. 7, 11, 12 or 13)?  
Christopher Phelps -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2667 Tax Accepts
CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
Reply
May 20 8:27 PM (2 hours and 40 minutes and 19 seconds later)
         
Reply to Christopher Phelps's Post: I am talking about the bankruptcy estate tax return filed by the trustee in a Chapter 7 individual matter. Therefore, we are filing a Form 1040 attached to a Form 1041.
Customer (name blocked for privacy)
Answer
May 20 8:47 PM (20 minutes and 25 seconds later)
         
REPLIEDCheck Mark

The only time you are REQUIRED to file as MFS is if you have elected to end your tax year on the day before filing bankruptcy AND your spouse is not joining you in that election.  

For Example:  You file a joint bankruptcy petition on 5/15/05.  You elect to end your tax year on 5/14 so that any tax liability for the short-period ended 5/14 will be part of the bankruptcy estate.  You wife elects NOT to join you.  Thus you will be required to file a MFS return by 9/15 covering the period from 1/1/05-5/14/05.  You would also file a MFS return for the period 5/15/05-12/31/05.  Your wife would file a calendar year MFS return for 2005.  If your wife joins you in the election to end the tax year on 5/14/05, you may file a joint return for both short periods. 

Also, if applicable you may still be subject to AMT.  You need to calculate Form 6251 to determine if you have AMT.

The estate in preparing its return (Form 1041) may take one personal exemption and may either itemize or use the MFS standard deduction.  In figuring the "estates" tax the trustee must always use the MFS tax tables.  The bankruptcy estate figures its tax like an individual.  Thus, personal exemptions and itemized deductions may be phased-out under the MFS rules.

         

Edited by chris21 on May 20 2005 at 9:13 PM
Christopher Phelps -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2667 Tax Accepts
CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
Reply
May 21 9:35 AM (12 hours and 47 minutes and 34 seconds later)
         
Reply to Christopher Phelps's Post: What I am asking is whether the alternative minimum tax is ever applicable (if that tax is more than MFS)where the trustee is filing a bankurptcy estate return 1040 attached to a 1041 in a Chapter 7 mattter? An IRS agent told me that Alternative minimum tax is not applicable and I am trying to verify that info.
Customer (name blocked for privacy)
Answer
May 21 12:06 PM (2 hours and 31 minutes and 32 seconds later)
         
ACCEPTEDCheck Mark

Its not applicable to the bankruptcy estate return (i.e. the 1041 w/ 1040 attached).  It is applicable to your 1040 filed separately. 

Christopher Phelps -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2667 Tax Accepts
CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
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