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Deceased taxpayer's estate is in process of administration. Estate and Qualifying Administrative Trust have elected under IRC 645 to file a combined fiduciary income tax return (this is the 'initial' return). The Estate and Trust, during it's administration, is the recipient of non-passive trade or business income and portfolio (investment ) income, but has significant pass-thru farming business losses from a farming partnership in which the decedent, prior to death, was a general partner and qualified as an 'at-risk' and 'material participant' farmer.
My question is this - On the fiduciary income tax return during the administration of the estate/qualifying trust can the farming business loss be considered a non-passive loss since the decedent previously qualified as an 'at-risk' and 'material participant' farmer or does this loss now become a 'passive loss' under the 'passive activity loss' rules because we now have a fiduciary who may or may not qualify as a 'material participant' under the ordinary definition of the term? In other words, for an Estate in administration, does the fiduciary have to meet the 'material qualification' tests or does he/she assume the status of the decedent taxpayer until the estate/qualifying trust is terminated and distributed to the beneficiaries?
I know that no specific definitive rules have been established in this area for estates and trust, except to generally follow the individual taxpayer rules under IRC 469. What is your experience in this area?
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Power Member
Group: Forum Members
Last Login: 3/12/2011 12:58:57 PM
Posts: 147,
Visits: 823
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| With rentals - passive vs active for the 25k - you look to the trustee's involvement. I think there was a court case within the last 5 years where a farming operation was in a trust or estate and they looked at whether using a farm manager would qualify. I hope that was the issue.
Mary Kay Foss
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Power Member
Group: Forum Members
Last Login: 3/12/2011 12:58:57 PM
Posts: 147,
Visits: 823
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Look at the Mattie K. Carter Trust case from 2003.
Mary Kay Foss
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Mary K. thanks for your input. I ca always count on you.
HEH, CPA
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