|
Home
Frequently
Asked Questions
Case
Studies
Accountants Who Come To Us For Guidance
Newsletters
Useful Links
David M. Kaufmann, CPA
7200 S. Alton Way,
Suite B-195
Centennial, CO 80112
Voice: 720.493.4804
(toll-free) 800.326.6686
Fax: 303.796.7768
(toll-free) 888.326.6686
Email:
Email:
contact2@kaufmann-cpa.com
|
Does Your Tax Professional Know His Trust Tax Law?
Lets face it. It is hard to tell if a
"professional" knows his stuff. So, how
do you know if the guy that is about to prepare a trust or estate return for
you knows his stuff?
I have a good test. Here is the question:
"How are professional fees allocated towards income in preparation of a
beneficiaries K-1?"
|
Answer |
How I Rate The Answer |
|
I don't know. |
As fast as you can, make an excuse why you need to
leave this guy's office. Find someone else. |
|
Allocate this deduction to all classes of income. |
This is a correct answer, but it is not the correct
answer that you want to hear. Again, find an excuse to get out of the
office. Find someone else. |
|
Allocate this deduction first to....
Call Dave Kaufmann, CPA at 1-720-493-4804 to see what the right answer
is. |
Bingo. This person knows his or her stuff.
Now ask one more critical question: |
Before we get to the next question, have the trust or
estate expert explain why this is the correct answer. The response
should be:
Allocate deductions to types of income that can be taxed
as high as 35% rather than types of income that have maximum tax rates of
15%.
Now ask the professional:
"What needs to be done to allocate the professional fees and other
deductions to taxable interest and nonqualified dividends?"
The correct answer is that the trustee must designate,
preferably in writing, that professional fees, and other deductions should
first be allocated to interest income that is fully taxable and to
nonqualified dividends.
Give bonus points if the tax professional mentions
treasury regulation §1.652(b)-3(b).
If you would like us to prepare your trust or estate tax
return, please call us at 1-720-493-4804.
Back to our Frequently Asked
Questions page for trusts.
US Estate Income Tax
Return
US Estate Income Tax Return Instructions
Colorado Estate Income Tax Return
|