What is a 663 election?
One of the tax planning tools available to fiduciaries of estates and non-grantor trusts is the 663(b) election, also known as the “65-day rule.” Simply put, a 663(b) election allows distributions made to beneficiaries within 65 days of year-end to be counted as prior-year distributions.
What is Section 663b?
2. Law and Analysis. Section 663(b)(1) provides that in general, if within the first 65 days of any taxable year of an estate or a trust, an amount is properly paid or credited, such amount shall be considered paid or credited on the last day of the preceding taxable year.
How do I make a 663 election?
In order to use the 65-Day Rule, the trustee must make the 663(b) election by checking the box on line 6 under other information on page two of IRS Form 1041, the trust’s fiduciary income tax return. To be valid, the election must be made by filing form 1041 by its due date, including extensions.
Can a simple trust make a 663 B election?
A “simple trust” is a trust that is required to distribute all of its annual income to the beneficiaries, but no principal may be distributed. In order to use the 65-Day Rule, the trustee must make the 663(b) election on page two of IRS Form 1041, the trust’s income tax return.
When to elect trustee under IRC 663 ( B )?
In addition trustees must wait until February to receive the 1099s to determine if a distribution under IRC 663 (b) is beneficial. To manage the tax burden IRC Section 663 (b) allows trustees to elect to make distributions to trust beneficiaries in the first 65 days of the new calendar year.
What are the special rules applicable to section 663?
26 U.S. Code § 663. Special rules applicable to sections 661 and 662 Any amount which, under the terms of the governing instrument, is properly paid or credited as a gift or bequest of a specific sum of money or of specific property and which is paid or credited all at once or in not more than 3 installments.
When to file a § 663 ( B ) distribution?
The Estate’s Executor made a distribution in the amount of $a (“Distribution”) within 65 days of the Estate’s taxable year ending b. The Executor intended to file a § 663(b) election, but due to inadvertence the § 663(b) election for the taxable year was not timely filed.
When does section 651 apply to Section 661?
Any amount paid, credited, or distributed in the taxable year, if section 651 or section 661 applied to such amount for a preceding taxable year of an estate or trust because credited or required to be distributed in such preceding taxable year.
