SECTION 2. BACKGROUND

Both estates and trusts can function to settle the affairs of a decedent and distribute assets to heirs. In the case of a revocable inter vivos trust, the grantor transfers property to a trust that is revocable during the grantor’s lifetime. When the grantor dies, the power to revoke ceases and the trustee performs the settlement functions typically performed by an estate executor. H.R. Conf. Rep. No. 220, 105th Cong., 1st Sess. at 711 (1997).

Section 646(a) provides that if both the executor (if any) of an estate and the trustee of a qualified revocable trust elect the treatment provided in § 646, such trust

1H.R. 2676, 105th Cong. § 612 (1997) would redesignate § 646 as § 645. If the redesignation is enacted, all references in this revenue procedure to § 646 shall be deemed to be references to § 645.

1998–4 I.R.B 21 January 26, 1998

(5) Provide a representation that as of the date of the decedent’s death, the trust for which the election is being made, or a portion thereof, was treated under § 676 as owned by the decedent of the estate referred to in § 646(a) by reason of a power in the decedent to revoke (determined without regard to § 672(e)); and

(6) Be signed and dated by both an executor or administrator of the estate and a trustee of the qualified revocable trust. If there is more than one trustee, only one must sign the required statement, unless otherwise required by the governing instrument or by local law. Similarly, if there is more than one executor, only one must sign the required statement, unless otherwise required by the governing instrument or by local law. If there is no probate estate and, hence, no executor or administrator, the election may still be made. In that case, a TIN must still be obtained for the estate and only a trustee of the qualified revocable trust must sign the required statement; however, the required statement must then include a representation that there is no executor or administrator and that neither an executor nor an administrator will be appointed.

.02 Submission of the Required State- ment.

The original required statement must be attached to the Form 1041 filed for the estate for its first taxable year. Additionally, except as provided in SECTION 3.03, a copy of the required statement must be attached to a Form 1041 filed for the trust for the taxable year ending after the date of the decedent’s death. The election is considered made when the original required statement is attached to the Form 1041 filed for the estate’s first taxable year, or when a copy of the required statement is attached to the Form 1041 filed for the trust, whichever occurs first. Once made, the election is effective from the date of the decedent’s death.

If the election is made, then the items of the trust, including income, deductions and credits, that are attributable to the qualified revocable trust for the period subsequent to the decedent’s death must be excluded from the Form 1041 filed for the trust for the taxable year ending after the date of the decedent’s death and must be reported on the estate’s Form 1041. If there is no executor or administrator and neither one will be appointed, a trustee of

the qualified revocable trust must sign every Form 1041 filed for the estate.

If a Form 1041 reporting the items of the trust has already been filed for the trust for its taxable year ending after the date of the decedent’s death without a copy of the required statement attached to the form, then the trust must file an amended Form 1041 and attach a copy of the required statement to the amended form. The items of the trust that are attributable to the qualified revocable trust for the period subsequent to the decedent’s death must be excluded from the amended Form 1041 and reported on the estate’s Form 1041.

.03 A Form 1041 Does Not Have to be Filed for Certain Trusts.

The trust does not have to file a Form 1041 for its taxable year ending after the date of the decedent’s death if the following conditions are met: (1) The Form 1041 for the estate’s first taxable year is filed before the due date for filing a Form 1041 for the trust for the taxable year ending after the date of the decedent’s death; (2) The trust items attributable to the decedent are reported pursuant to § 1.671– 4(b)(2)(i)(A) or (B); and (3) The entire trust is a qualified revocable trust.