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As always, please let us know if you have suggestions for improving the software.

With the recent release of our 1041 and state fiduciary income tax software for 2014, you should have everything that you need to provide beneficiaries with their K-1s.

This year’s transition from “Legacy” e-file to “Modernized” e-file has stretched resources at various levels, including the IRS and state departments of revenue. As a result, we have encountered some delays in getting (a) answers to questions about 1041 returns that are to be submitted for e-file testing and (b) results of state testing of scannable paper-based sample returns. We received approval from Indiana two days ago, and are expecting the last of our 12 state approvals from Ohio within the next couple of days.

Once we have released e-file software for the 1041, NJ, NY, and PA, you will find the process extremely efficient. If you are registered to e-file with the IRS (by obtaining your EFIN), and choose to e-file your state returns as well, you must e-file the 1041 and state returns together. They will both be transmitted to the IRS, which will run some initial validation tests on the state data before transmitting it to the state. In the case of the PA-41, this will make it unnecessary for you to attach a paper copy of the entire 1041 (including all statements and attachments) to the paper PA-41 (now required starting with 2014 returns). E-filing will take care of all of this automatically.

In addition to preparing test returns for e-file testing, we are in active discussion with the IRS about the “stockpiling” rule (which we understand is enforced only in abusive situations). This rule states that, once a preparer has everything necessary to e-file a return (including the signed 8879-F authorization to e-file), the preparer must e-file within three (3) business days. Technically, a fiduciary could hold back the 8879, transmit it to the preparer only when the e-file software is ready, and thus comply with the stockpiling rule. We recognize, however, that this procedure could be somewhat disruptive to the flow of gathering the signed 8879-Fs at the time that you are meeting with your clients.

Because of this tax season’s unusual circumstances, we are trying to obtain from the IRS a waiver of this technical stockpiling rule. We (and, we believe, most/all customers) would settle for an informal waiver. We should know more within the next day or two, and will keep you posted.

IN IT-41: Based on approval just received for this return, you should enter the following code in the “Code” field on the right panel: 4104. This will remove the “Do Not File” watermark.

Changes from 2015-044 to 2015-048:

Page 1, Line 8: Unified credit was including credit applied in current year. Changed to include only prior years.

PA-41 (2012-13)
Navigation to Rev-276 (Application for Extension): Was landing on 2011 version. Now landing on 2012 or 2013 version, as appropriate.

Changes from 2015-035 to 2015-044:

Cash Bequests amounts were not being reflected in the calculation of the pre-residue (because logic added to the forthcoming “beautified” version of 6-in-1 was prematurely implemented). Resolved.

Page 3, Schedule B, Line 1 (Columns C and E) and Line 3 (Column E) were displaying the 2013 totals. Changed to display the 2014 totals. The calculation on Page 1, Line 2, was correct.

Pages 1 and 3: If there is a potential mismatch between the 2013 Line 12 and the 2014 Line 8, a red block is displayed. The display of this red block is now correctly based on a comparison of 2013 vs. 2014 (rather than 2012 vs. 2013).

NY ET-706 (4/1/2014 and later)
Page 1, Lines 3 and 4: Were displaying the parallel DecoupleCruncher version of these amounts (which are based on other user input). These fields have been repointed to the correct ET-706 version.

Note: in 2015-048, the bottom two lines (3 and 4) on the Line 3 worksheet screen are still displaying the DecoupleCruncher versions. This display has been corrected, and will be shipped in the next upgrade.

Page 1 (bottom): The City, State, and Zip Code fields were moved to the left into their correct positions.

PA-41 Adjustments Report: this report was added so that you can track various transaction-driven adjustments that new Schedules A and B now require.

Code 19.53 (Accrued Interest on U.S. Obligations): Adjusted to display a “Type” of BG (Bond Government) rather than BM (Bond Municipal). This change is important because of the way that Schedule A of the PA-41 now works (starts with 1041 interest, then subtracts U.S. Obligation interest and adds non-PA Municipal Bond Obligation interest.

PA-41 result: Added a help screen to explain the significance of “US Oblig” where a PA-41 line number would normally appear.

All Returns
Lightened all of the “Draft” watermarks, and moved them to the “back”, so that text that appears in the same space is now readable.

PA-41 (2014)
Schedule B, Line 8, Capital Gains Distributions. Short-term capital gains distributions (Code 26.15, already included in 1041 Line 2 income, and therefore in PA-41 Schedule B, Line 1, income) were also appearing on PA-41, Schedule B, Line 8. Thus, they were being double counted. Logic was added to suppress short-term capital gains distributions from Schedule B, Line 8, while still displaying long-term capital gains distributions.

View Statements: The list no longer includes Lines 1 or 2, because they now start with 1041 income, and no longer have independent meaning. See the note under Transact (above) regarding a PA-41 Adjustments report that will provide backup for other lines on Schedules A and B.

Print Options: Except for the lines calling for “Description”, the Department does not want any supporting details for any lines on Schedules A or B.

(1) The statement for 2cg Capital Gains Distributions has been restored. It will include only long-term capital gains distributions, and will include a “For information only. Do not file” watermark.

(2) The first two checkboxes (formerly Lines 1 and 2) are now reserved. Because we now skip those two checkboxes, the “Set All” button was creating a mismatch between the asterisk and the checked box (off by two boxes). This issue has been resolved.

(3) Main Forms and Schedules: A “Print Required” button was added, so that these forms and schedules will be checked only as needed. Also, the sequence of checkboxes was changed to a (mostly) alphabetical sequence.

(4) The checkboxes for printing Pages 1 and 2 of the 1041. Starting with 2014, PA now requires that the entire 1041 (including all statements and other attachments) must be attached to the PA-41. Note that, when e-filing becomes available, you will be required to e-file your 1041 and PA-41 together (if you choose to e-file your PA-41). Thus, the process of attaching the 1041 to the PA-41 will be automatic and much less time consuming than paper filing.

e-file statistics (through 10/20/2014):

Accepted: 2,018 (118 firms)
Rejected: 34 (beny EIN missing digits; beny zip code wrong length; K-1 count override; decedent and grantor trust both checked; foreign beny needs “. ” in state field; Grantor Trust with unnecessary supporting statements – call for resolution).

Accepted: 733 (63 firms)
Rejected: 4

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