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6-in-1 Server Release Notes

Looking for 6-in-1 Standalone? Download it here.[/vc_column_text][vc_tta_accordion active_section=”10″ collapsible_all=”true” el_class=”new-accordion”][vc_tta_section title=”2022 Release Notes” tab_id=”1644514992555-6223f217-51be”][vc_column_text]

The Log4j library is NOT used anywhere in our software and our 6-in-1 users are NOT affected by this issue.

1. Main Menu, Yellow State Module Buttons.  For state modules, instead of clicking the button to get a list of states, we now provide a button (on the right edge of the yellow buttons) for the state that is specific to the estate or trust that you have selected.  Now you can click on that button and go directly to that state’s module.  Note to OH users:  In version 2022-041, that feature was working beautifully for the State Inher/Estate Tax button but not so beautifully for the other three buttons.  This was happening because it was testing for whether the state has a state-specific estate tax return (rather than testing for whether the state has a state-specific Inventory, Accounting, or Fiduciary Income Tax Return).  Of course, OH abolished its estate tax as of 1/1/2013, so the test for the other three buttons was not working as expected.  This issue has been resolved in Version 2022-044.
2. Main and License Key Menus.  If your maintenance term has expired or is within 30 days of expiring, you should now see a large black arrow pointing to the License Key button (upper right of Main Menu) and the Update License Key button (bottom of License Key screen).  For anyone who misses this arrow, we have ophthalmologists standing by.
3. [Bank] Ledger.  In FileMaker 19, we were getting reports that large Bank Ledger sets ( > 200 transactions) could be very slow to display.  Accordingly, we made a slight change (several months ago) to force the “Use Dates” box to be checked when you arrive on that screen, and to force the date range to be the current month.  This was understandably irritating to some users, so we have reverted the Ledger button to its previous behavior (keeping the “Use Date” box status and the date range as you left them).  We did keep one change.  If you have not yet selected a bank from the dropdown menu at the top of the Ledger screen, we will not display any transactions in the portal below.  This largely addresses the speed issue with FileMaker 19 (which is blazingly faster than FileMaker 11 in most other aspects of 6-in-1 operations).
4. Bankle (our version of Wordle, the five-letter online word game that is now all the rage and just purchased by the New York Times).  We have joined the movement on your beloved Ledger screen. As you surely know, there are buttons on the upper right of the Ledger screen for selecting the month and year for display of your bank transaction data.  Click on a year button (currently 2019 – 2022), and you will get a date range of 1/1/yy – 12/31/yy for that year.  Click on a month button, and you will get the date range for that month and the year that you have previously selected.But you might have transactions for three of the four years, and it might be worth knowing which years.  “Bankle” to the rescue!  Let’s say that you have transactions for the selected bank for 2019-2020-2021, but not yet for 2022.  When you select a bank, Bankle will highlight the 2019-2020-2021 buttons in light green, but keep the 2022 button in light gray.  If you then click on one of these three light green buttons, thereby forcing display of bank transactions for that year, that light green button will turn darker green to indicate your selection.  If you happen to click on the gray 2022 button, thereby forcing display of no bank transactions (because none for that year), that light gray button will turn darker gray.A similar thing will happen with the month buttons, but without the green highlighting.  A month’s light gray color will turn darker gray to indicate your selection.If you try to enter a word like ADIEU or AROSE or AUDIO or CANOE or CRANE or IRATE or LATER or RAISE or STEAR or TEARY, it won’t do anything for you because that’s Wordle’s thing and not Bankle’s thing.😀
5. FM 19 Transact and General Information Dropdown Arrows.  Whenever there is no list to display, FM 19 would hang.  We resolved that issue in most places by checking first for the existence of a list before attempting to display it.  This was not necessary in FileMaker 11.
6. PA-1500.  If have only an F and/or G transaction, and have not allocated it to anybody, will no longer default to the Exempt/Charitable column in the Pre-Residue section at the top of the Tax Allocation screen in the PA-1500.  Will default to the highest tax class for any beneficiaries entered in the Beneficiaries database (15%, 12%, 4.5%, or 0%).  If no Beneficiaries yet entered, it will default to 15% rather than to Exempt.
7. 709 TG-7.  Numbers starting with 2006 are now all displayed in a small 5-point font size to accommodate $1 billion+ gifts.  We encountered this issue late in last year’s tax season with one of our longtime 6-in-1 customers.
8. 709 Now Highlights the Other Spouse on the Right-Hand Panel.  If you pick a donor or donor spouse on the right panel, that name will highlight in a slightly brighter yellow, and the related spouse’s name will highlight in a pale (but visible) yellow.
9. 709.  Page 1, checkbox in upper right to display “Amended” along the top a required by the instructions.
10. Navigation to Various State Estate Tax Returns (CT, MA, NJ, and NY) (FileMaker 19).  This navigation should now work as expected.
11. “General Information” Button (etc.) on Right-Hand Panels (FileMaker 19).  We had made a change for FileMaker 19 to prevent display of the various blocks in your tray at the bottom for the open files (an artifact of new behavior of FileMaker 19 for Windows).  The change we made (to close a file once you navigated to another file) had the unforeseen consequence of losing the found set.  As a result, if you were in the Accounting module and clicked on the “General Information” button on the right-hand panel, it would not take you to the record for your active estate or trust. In a multi-user scenario, it would take you to the very first estate or trust entered into the system for your firm.  Although using the 6-in-1 dropdown menu continued to work as expected, we have changed the mechanism from “close” window to “hide” window.  This preserves the found set, and life is now back to normal.
12. CT Inventory (PC-2407, NEW 1/22).  Adapted the CT Inventory pages to this new form.
13. CT Accounting (PC-4406, NEW 1/22).  We also adapted the CT Accounting cover pages to this new form.  When we were about 95% of the way in this work, we realized that this new form is used solely for Conservatorships, Guardianships, and Trusts.  We soldiered on nonetheless and made sure that you now have access to both (unchanged PC-241 REV 7/13 for estates and the new PC-4406 for everything else).
14. Code for PA 9113A Sole-User Trusts (Survivor).  Added code 12.15  for Pennsylvania Section 9113A “Sole-Use Trusts” (when tax is deferred from first estate to second estate).  This new code can be found under both the 9113A and Transfer categories.  This gives you a PA G_6 result for the assets for which a surviving spouse is deemed to be the “transferor” because predeceased spouse’s estate did not elect to pay tax on the first estate.  In this case, assets are taxable in the surviving spouse’s estate with no implications for any other modules (including 706, where presumably the asset was reported in the first estate).
15. Transact “Name” vs. “Date” on Right-Hand Panel.  In last year’s update, this panel was inadvertently set to display “Date” rather than the “Name”.  In multi-user installations, changing it on your workstation would stick only during your current session, and would revert to “Date” on your next launch of 6-in-1.  Making it sticky required a change at the server level in standalone mode (with everyone kicked out of 6-in-1 and the FileMaker Server service stopped).  This year’s release restores the default to “Name”.
16. e-file Filter for List of Estates and Trusts.  Made sure that the filter “O” (inadvertently stored with last year’s update) was removed, so that all estates and trusts for the selected year will now be displayed by default.  Added black background with white foreground to the year “radio buttons” at the top to make them more conspicuous.

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v2021-070, Released on 3/11/2021:

Password:  showtime

Installation
Administrative and IT personnel and “self-help” users:  please see installation instructions/reminders at the end of this e-mail.

Always close 6-in-1 (standalone on your desktop, or FileMaker Server on your server in multi-user scenarios).

Marty O’Toole Retirement
Marty O’Toole had a 20-year career as a podiatrist before joining us in tech support in 2000.  Until his retirement in 2020, he spent 20 years applying his renowned bedside manner to 6-in-1 users who were his “patients” as he tried to diagnose what ailed them.  He mastered the registry; he conquered the installers; he became a world-class expert on FileMaker Server; he packaged up the software multiple times a year;  and he trained countless users on how to press Next, Next, Next, Accept, Next, Finish.  On one support call (of the thousands that he handled over 20 years), he told one user that “About taxes, I know nothing.”  We couldn’t help but observe that he was underestimating himself.  He actually knew very little.  We always appreciated the good humor and great competence with which he did his job, and will miss him!  If you have a Marty story or testimonial you would like to share, we’ll include it in the batch we’ll present to him at his delayed retirement party:  MartyGoneFishing@lacknergroup.com

Andrew Cummings (Marty 2.0)
Most of you who have interacted with us over the past months have gotten to know Andrew Cummings, an opera singer (baritone) originally from Maine, then Quakertown PA, and now Yonkers NY.  Vince and Anne Lackner hosted him for six weeks in June/July of 2015 when he performed for the Opera Theater of Pittsburgh (now Pittsburgh Festival Opera), then twice more in the next three years.  It turns out that, in addition to playing a spectacular version of the barber in “Sweeney Todd:  The Demon Barber of Fleet Street”, he had been using FileMaker for some 24 years (since he was 17).  He brings a big personality and an amazing array of technical skills to the job.  Among other things, he has been instrumental in building the automatic License Key update feature introduced in this current update.  We welcome Andrew to the team, and look forward to seeing some more of his dazzling innovations.

FileMaker 11 vs. FileMaker 19
Two sets of users:

A.  FileMaker 11 (Windows):  Follow the usual installation instructions (below)

B.  FileMaker 19 * (Windows and Mac):  Unzip the file into your EstateNN folder into your active data directory.  Then launch 6-in-1 to allow the update to occur.

*  FileMaker 19:  Windows Server 2019 and the Mac OS of recent years have “outrun” FileMaker 11 (become incompatible).  Accordingly, over the past several years, we have been migrating these firms to FileMaker 16/17/18/19, the last of which is 10 years newer than FileMaker 11.  The rest of our user base will be hearing more about this in the months to come.

Update instructions for FileMaker 19:  There is no “installer” yet for these installations. After you close 6-in-1 (and stop the FileMaker Server service, if applicable), just unzip the downloads file into your estates file (usually Estate19, but could be Estate18, or Estate17, or even Estate16), and overwrite any conflicting file names.  This will not delete any of your data.  Then launch “6in1 for Data” (from a desktop icon), or FileMaker Pro and the Opener file.  This will run the update.  Once it is finished, close FileMaker Pro.  Then restart FileMaker Server (if applicable), then relaunch 6-in-1 (after the appropriate waiting time for server installations, noted in the “6-in-1 Download and Installation Instructions” at the bottom of this e-mail).

Seventh Release This Season
2021-070 (03/11/2021)
2021-067 (03/08/2021)
2021-059 (02/28/2021)
2021-054 (02/23/2021)
2021-050 (02/19/2021)
2021-049 (02/18/2021)
2021-046 (02/15/2021)

Starting with the first release on 2/15/2021, 6-in-1 download and launch counts for users of these 2021 versions are as follows:

Firms:                                       257
Users (via “Device ID”):           567
Launches (6-in-1 opened):   7,633

We have followed the same update procedure for at least the past 14 years (starting with a 6-in-1 update e-mail sent on 2/20/2007).  We’re glad that those who needed the 2020 forms software earlier in the season were able to find the links on our website starting on 2/15/2021.

We have been slightly delayed with this e-mail notification for the following reasons:

1) FileMaker 19:  More and more firms running this version.  Thus, we’re currently managing two versions, reconverting our master 6-in-1 from FileMaker 11 to 19 as needed.

2) 709:  Re-engineered this year to make it 5-10x faster.  It now includes as many as 18 years of gift tax returns (2003 – 2020), so the restructuring was necessary.

3) NumberCruncher:  This estate and financial planning tool (with 115 modules) was first created in 1984 by Steve Leimberg and Bob LeClair, based on VisiCalc, the first spreadsheet ever invented.  Since that time, Leimberg & LeClair (now Leimberg, LeClair & Lackner) has grown the user base to 3,500 firms with 4,200 users.  These users include the IRS, 80+ of the country’s largest 145 law firms, and 30+ of the country’s largest CPA firms.  Upon the 11/30/2020 retirement of Kathy Maphis, who ran the Leimberg office for 25 years, we took over operations effective 12/1/2020 and moved them to the Lackner Group offices in Carnegie (Pittsburgh).  Modernizing all of the Leimberg systems during December and January kept us hopping!

Current 6-in-1 includes the following:

19 versions of the 706 (1997-1999, 2001-2013, 2017-2019).
Supports estates going back to 10/9/1990.
19 versions of the 1041 (2002-2020)
18 versions of the 709 (2003 – 2020)
231 versions of the State Fiduciary Income Tax Returns
(2002 – 2020; NC 2006; VA 2005)
12 versions of the Inventory (12 states)
12 versions of the Accounting (12 states)
9 U.S. miscellaneous forms (SS-4, 56, 843, 2848, 4421,
4810, 5495, 8821, 8822)
11 NC Probate Forms
15 PA Probate Forms

Annual Changes to 100+ Tax Return Pages
Each year, there are a thousand or two items that have to be changed, then tested, throughout the software to reflect changes required in the 100+ tax return pages that we support.  Thus, it’s a highly iterative process that lasts from September until all forms are released by the IRS and state departments of revenue in final form sometime in February or even into March.

2021 Update (for 2020 forms)
This version includes the following approvals for 2020 forms:

Approved
e-file:          1041
PA

Note regarding 2018 and 2019 state e-file:  The 2020 schema
included two new fields.  These fields interfered with processing
of 2018 and 2019 returns, leading to state rejections.  We have
fixed this with several users over GoToMeeting.  This update
contains that fix.

Paper file:  1041, 709 (no new 706 for 2020)
NC, PA

Pending
e-file:          CT, DE, MA, NJ, NY, OH, VA

   Paper file:   CT, DE, IL, IN, MA, NJ, NY, OH, VA, WI

Watermarks:  Removed from all K-1s or their equivalents
Main pages display “Client Copy”*

* You may remove, but be SURE that you do not paper file any returns before we have confirmed state department approval:

CT (4101), DE (4102), IL (4103); IN (4104); MA (4105), NJ (4107); NY (4108), OH (4109), VA (4111), WI (4112)

Brief highlights of the 2021 updates

System
1.1  License Key:  For all releases starting with 2/15/2021, License Keys will be updated automatically once we receive your renewal.  Gone are the days of needing to e-mail or text or call you with License Keys, or sometimes all three.

1.2  Update Notifications: Brought right to your 6-in-1 License Key and Main Menu screens.  Whenever an update has been posted, your next launch of 6-in-1 will compare your current version with the latest version.  You will see a message at the top (in green letters) that an update is available.  The version number and revision date of your current version (very top) will turn red to alert you that you are no longer running the latest release.

1.3  Release Notes.  Also brought right to your 6-in-1 Main Menu screen (bottom).  This will alert you to changes made in later releases.

1.4  Privacy Notice.  Bottom left of your License Key screen.  This lists the data (none of it Personal Information) that we gather every time that you launch 6-in-1.  This allows us to improve the software and your overall experience, as well as determine at any given time what operating system and what version of 6-in-1 you are running.  This is what allowed us, for example, to provide you with the statistics above about the number of firms, unique users, and 6-in-1 launches to date.  The unique user count is based on the “Device ID”, an encrypted version of the hard drive serial number that the IRS requires us to include with every e-filed 1041.

Forms (including federal inflation adjustments)

2.1  706:  Exclusion $11.58M (2020) and $11.7M (2021)
No new 706 released for 2020
Significant refinement done in the portability area, to
handle two parallel sets of numbers (actual amounts
and amounts suppressed on schedules for portability)

2.2  709 for 2020:  Exclusion $11.58M (20120 and $11.7M (2021)
Annual exclusion $15K (2018 – 2021)
Now 5-10x faster
Alt-Click allows for virtually instant navigation from
page to page, worksheets back to main, and year
to year across all 18 years (2003 – 2020)

2.3  1041 and related forms and instructions for 2020 (e-file and paper filing)

New lines
Page 2, Line 17 (Refundable credit for qualified sick and family leave)
Page 2, Line 18 (Deferral, relating to Schedule H)

Excess deductions
Based upon final regulations issued on 9/16/2020, excess deductions (with limitations) have been reinstated, retroactive to tax years starting in 2018

Allowed
(1) Section 67(e) Expenses (Schedule K-1, Box 11A):  Correspond to
1041, Lines 12, 14, and 15a.  Reportable on 1040, Schedule 1, Line 22.

(2) Non-Miscellaneous Itemized Deductions (Schedule K-1, Box 11B):
Correspond to 1041, Lines 10 and 11.  Reportable on 1040, Schedule A,
Line 9 (Interest) or Line 10 (Taxes).  Subject to the limitations applicable
to interest and tax deductions.

Not Allowed
(3) Miscellaneous Itemized Deductions:  Correspond to 1041, old Line 15c.

Final Regulations on Excess Deductions:
https://www.federalregister.gov/documents/2020/10/19/2020-21162/effect-of-section-67g-on-trusts-and-estates

2.4  State Fiduciary Income Tax Returns for 12 states (eight of them include e-file):  CT, DE, IL, IN, MA, NC, NJ, NY, OH, PA, VA, and WI

2.5  PA-1500 (03-19):  Revised in March 2019 but not released to developers or the public until 9/27/2019. In November 2020 we learned that the Department was now preferring use of this form in order to expedite processing and to reduce errors.  This version (and related forms) includes the following:

(a) Page 1:  Checkboxes:  re-arranged

(b) Page 3:  Four new lines for Receipt Numbers for prior payments.
Three new checkboxes for options on how to handle
overpayments (leave on account, refund, or mixture of
leave/refund)

(c) Schedules F and G:  New column for last four digits of (bank) account

(d) Schedule AU (Agricultural Use Exemption) (09-19)

(e) Schedule C-SB (Qualified Family-Owned Business Exemption (04-19)

(f) Schedule C-1 Closely-Held Corporate Stock Information Report

(g) Schedule C-2 Partnership Information Report

(h) REV-1313 Application for Refund (07-19)

(i)  REV-1845 Notice of Intent to Enter Safe Deposit Box (12-19)

(j)  REV-1846 Extension to File (04-19)

2.6  Miscellaneous:  Updated US 2848 and US 8822.

2.7  DecoupleCruncher

(a) Year 2021 Added to Dropdown Year Menu

(b) Exclusions for 2021 (changes in blue)

CT:   $7,100,000
DC:  $4,000,000
HI:    $5,490,000
IL:    $4,000,000
MA:  $1,000,000
MD:  $5,000,000
ME:  $5,870,000
MN:  $3,000,000
NY:   $5,930,000
OR:  $1,000,000
RI:    $1,595,156
VT:   $5,000,000
WA:  $2,193,000

Pennsylvania

[repeated from February 2020 update notes]

PA-1500, Allocation of Assets
Allocation to Tax Classes.  We have revised how allocations to tax classes work.  Previously, if the decedent was married at death, we would allocate all unallocated assets to the spouse (0% rate), otherwise to lineal heirs (4.5% rate).

Allocate to Highest Tax Class First (New).  Now, however, we allocate all unallocated assets to the highest tax class for which you have entered a beneficiary in the Beneficiaries database.  This provides you with “guardrails” so that, if you fail to allocate all pre-residuary gifts (bequests, joint, transfers) and/or 100% of the residue, we will assign any unallocated assets first to the 15% tax class (if any), then to the 12% tax class (if any), then to the 4.5% tax class (if any), and finally to the 0% tax class.  This way, any incomplete allocations will tend to overstate the tax due, not understate it.

Insolvent Estates.  Also, we have added logic to handle insolvent estates, where the joint assets and/ transfers exceed the net probate estate available to pay expenses.  Normally, you would reduce the allocations to joint owners and transferees in the Transact file (in the “Allocations” screen – yellow button).  But even if you don’t, we will reduce the amounts allocated to joint owners and transferees in the Tax Allocation screen of the PA-1500 (Pre-Residue section at top) by the amount of the shortfall.  We will allocate the shortfall (as a reduction) to Schedule G transferees first, then to Schedule F joint owners.  You can, however, allocate more to Schedule F joint owners, which will reduce the allocations to Schedule G transferees accordingly.  See the section on the right side of the Tax Allocation screen in the PA-1500.

Odd Pennies, Rounding, etc. When you have two or more beneficiaries receiving shares of assets, there can be minor variances because of rounding.  For example, three beneficiaries splitting 1.00 in equal shares will get .33 each.  This generates a .99 total, with a variance of .01.  If the sum of variances is .99 or less, we will disregard this variance and display nothing in the 15% tax class that would otherwise display this variance.

Filter by Pre-Residuary vs. Residuary and by Tax Class.  In Beneficiaries, clicking on the “PA” button or the “NJ” button (upper right, to the right of the “2 Beny Shares/706” button) takes you to a grid showing the allocation of assets on a beneficiary-by-beneficiary basis.  There are three “Views” of this grid (#1, #2, #3).

In the upper left corner of these Views are new “filter” checkboxes:

PreResiduary vs. Residuary
Tax Class:  0%, 4.5%, 12%, 15%, Exempt (PA)
Tax Class:  AS, AO, C, D (NJ, View #3 only)

Check various combinations of these checkboxes to narrow the set of beneficiaries who will be displayed in the grid.  Note that the numbers at the bottom adjust to reflect the totals for just the beneficiaries who appear.

PA-1500, Parental Transfers to Minors:  Note this new tax class, which applies if all five of the following conditions are true:
1) PA decedent
2) Decedent died on/after 1/1/2020
3) Child is under the age of 22 on the date of the parent’s death
4) Decedent had one of the following relationships to the child:
(a) Natural parent
(b) Adoptive parent
(c) Stepparent
5) Transfer is to or for the use of the child

We have added logic to the Beneficiaries file that handles this new tax status.  We are also marking all eligible minor beneficiaries with a bright yellow highlight.

We have also added a new View #3 to the Beneficiaries file, with a more explicit display of how the burden is borne separately for tax generated by the pre-residue vs. tax generated by the residue.

Finally, we have even added an option (right side of View #3) that will “equalize” the net amounts to children (minors and non-minors), in case parents want this result despite the new law.  This entails allocating enough more to the non-minors so that, net of tax, they will get the very same net share that minors get free of tax.

Technical Notes
Please pay careful attention to the 6-in-1 Download and Installation Instructions at the end of this e-mail.

For multi-user installations, please remind your IT experts (who may not be reading these e-mails) that it takes a full 25-30 minutes for users to regain 6-in-1 desktop access after the FileMaker Server service has been restarted (after the update). We receive frequent calls from users who launch 6-in-1 and receive a blank gray screen. The most common solution is to wait the full 25-30 minutes before re-launching 6-in-1.

Also, be sure to turn off any anti-virus software, including BitDefender, before you run the update.

6-in-1 Download and Installation Instructions 
Be sure to close 6-in-1 before installing the update.

Please remember to disable any anti-virus software during the installation of 6-in-1 upgrades, then re-enable it when you are finished.

Download link:

Updates

Click on Standalone or Server.

The password is showtime

Standalone. Click on the link, choose Run (or Save), and follow the prompts.

Server. In addition to closing 6-in-1 at all workstations, be sure that you stop the FileMaker Server service on the network. You should also review our updated FMS11_Instructions_2018_04_05.pdf file available on our Downloads, Server page.

When you are finished with the installation, you must (a) restart the FileMaker Server service and (b) wait for at least 25-30 minutes (while all 6-in-1 files are opening on the server) before trying to access 6-in-1 from any workstations.

For FileMaker Server 19, the wait time is dramatically shorter (10-15 minutes).

Note #1. The software will import your data from prior returns into the newest software. It will not overwrite your data. Unless otherwise stated, all 6-in-1 updates are cumulative.

Note #2. Your screen may go “white” for several minutes or more at the end of the upgrade. This is expected. Please wait until the screen returns to its normal condition before you proceed. We have shortened this step considerably compared with prior upgrades.

Sincerely,
The Lackner Group, Inc.

Physical Mailing Address:
Carnegie Office Park, Suite 290
800 North Bell Avenue
Carnegie, PA  15106

v2021-067, Released on 3/08/2021:

Password:  showtime

v2021-059, Released on 2/28/2021:

Password:  showtime

v2021-054, Released on 2/23/2021:

Password:  showtime

v2021-050, Released on 2/19/2021:

Password:  showtime

• Update notification mechanism refined
• Migration preparation tools for 11 >> 19 refined.
• Several other minor tweaks/fixes.

v2021-049, Released on 2/18/2021:

Password:  showtime

• Screen zoom control restored
• Error message on closing eliminated
• 709:  Logic for GST Exemption used in prior years refined
• AFR:  7520 rate for March 2021 added
• Several other minor tweaks/fixes.

Password:  showtime

• Updated tax forms (all conformed to 2020 versions)
  • US (Approved!)
  • PA (Approved!)
  • NC (Approved!)
  • OH
  • WI
  • CT
  • MA
  • IN
  • IL
  • DE
  • NY
• Gift tax speed increases!
• Auto-update for License Keys!
• And much more…

Completed release notes to come soon… check back in the coming days![/vc_column_text][/vc_tta_section][vc_tta_section title=”2020 Release Notes” tab_id=”2020-Release-Notes”][vc_column_text]

02/21/2020

Version 2020-052 has been posted on our website and is available for immediate download.

The password is showtime

This version includes the following state approvals for 2019 forms:

Approved

e-file: 1041

   CT, DE, MA, NJ, NY, OH, PA, and VA

paper file: 1041, 709, 706,

CT, DE, IN, NC, PA, VA, WI

Pending

paper file: IL, MA, NJ, NY, OH (paper filing)

watermarks: removed from all K-1s or their equivalents

   main pages display “Client Copy”

We have completed the submission of all 109 test returns that we had to provide for e-filing approval (46) and paper filing approval (63). We discovered that some of the test returns (as issued by the IRS and several states) had some flaws. This meant that we had to go back and forth with the IRS and the several states to explain what the flaws were and how we were proposing to handle them.

Fourth Release This Season
2020-001 (01/01/2020) (not announced)
2020-013 (01/13/2020) (not announced)
2020-045 (02/14/2020) (not announced)
2020-052 (02/21/2020) (announced with this e-mail)

In the future, we will announce the early versions, explain what they include, and let you decide whether you want to download them then or wait for a later release once more (or all) federal and state approvals have come in.

Brief highlights of this 2020-052 update (more details to follow)

Forms (including federal inflation adjustments)

1) 706 for 2019: exclusion $11.4M (2019) and $11.58M (2020)

2) 709 for 2019: exclusion $11.4M (2019) and $11.58M (2020)
annual exclusion $15K (2019 and 2020)

3) 1041 and related forms and instructions for 2019 (e-file and paper filing)

4) State Fiduciary Income Tax Returns for 12 states (eight of them including e-file): CT, DE, IL, IN, MA, NC, NJ, NY, OH, PA, VA, and WI)

5) PA Probate Forms (Register of Wills and Orphans’ Court) revised effective 1/1/2020 (with trivial changes in all cases)

6) Updated 56, 2848, 4768, 8821, 8892, SS-4. Note that the 4768 dated December 2019 has not yet been released in final, but we expect a final version any day.

1041: Now a three-page form. This is the first time in 51 years that the page count has changed. It became a two-page form in 1968.

PA-1500: The PA-1500 was revised in March 2019 but not released to developers or the public until 9/27/2019. We asked the PA Department of Revenue when it might start enforcing use of the new version. We received the following response on 10/21/2019 from the Division Chief of the Bureau of Individual Taxes (an e-mail sent to all 67 Registers of Will):

It has been brought to our attention that some of the Register of Wills offices are stating that they will only accept the new version of the REV-1500. Can you please inform all the Register of Wills offices that they should accept all versions of the REV-1500 that are submitted? We encourage the taxpayers to use the newest version; however, we can accept all versions of the return.

We are working on a variety of new and revised forms released by the PA Department in connection with inheritance tax, and will keep you posted on our progress.

PA-1500, Allocation of Assets
Allocation to Tax Classes. We have revised how allocations to tax classes work. Previously, if the decedent was married at death, we would allocate all unallocated assets to the spouse (0% rate), otherwise to lineal heirs (4.5% rate).

Allocate to Highest Tax Class First (New). Now, however, we allocate all unallocated assets to the highest tax class for which you have entered a beneficiary in the Beneficiaries database. This provides you with “guardrails” so that, if you fail to allocate all pre-residuary gifts (bequests, joint, transfers) and/or 100% of the residue, we will assign any unallocated assets first to the 15% tax class (if any), then to the 12% tax class (if any), then to the 4.5% tax class (if any), and finally to the 0% tax class. This way, any incomplete allocations will tend to overstate the tax due, not understate it.

Insolvent Estates. Also, we have added logic to handle insolvent estates, where the joint assets and/ transfers exceed the net probate estate available to pay expenses. Normally, you would reduce the allocations to joint owners and transferees in the Transact file (in the “Allocations” screen – yellow button). But even if you don’t, we will reduce the amounts allocated to joint owners and transferees in the Tax Allocation screen of the PA-1500 (Pre-Residue section at top) by the amount of the shortfall. We will allocate the shortfall (as a reduction) to Schedule G transferees first, then to Schedule F joint owners. You can, however, allocate more to Schedule F joint owners, which will reduce the allocations to Schedule G transferees accordingly. See the section on the right side of the Tax Allocation screen in the PA-1500.

Odd Pennies, Rounding, etc. When you have two or more beneficiaries receiving shares of assets, there can be minor variances because of rounding. For example, three beneficiaries splitting 1.00 in equal shares will get .33 each. This generates a .99 total, with a variance of .01. If the sum of variances is .99 or less, we will disregard this variance and display nothing in the 15% tax class that would otherwise receive display this variance.

Filter by Pre-Residuary vs. Residuary and by Tax Class. In Beneficiaries, clicking on the “PA” button or the “NJ” button (upper right, to the right of the “2 Beny Shares/706” button) takes you to a grid showing the allocation of assets on a beneficiary-by-beneficiary basis. There are three “Views” of this grid (#1, #2, #3).

In the upper left corner of these Views are new “filter” checkboxes:

   PreResiduary vs. Residuary
   Tax Class: 0%, 4.5%, 12%, 15%, Exempt (PA)
   Tax Class: AS, AO, C, D (NJ, View #3 only)

Check various combinations of these checkboxes to narrow the set of beneficiaries who will be displayed in the grid. Note that the numbers at the bottom adjust to reflect the totals for just the beneficiaries who appear.

PA-1500, Parental Transfers to Minors: Note this new tax class, which applies if all five of the following conditions are true:
1) PA decedent
2) Decedent died on/after 1/1/2020
3) Child is under the age of 22 on the date of the parent’s death
4) Decedent had one of the following relationships to the child:
(a) Natural parent
(b) Adoptive parent
(c) Stepparent
5) Transfer is to or for the use of the child

We have added logic to the Beneficiaries file that handles this new tax status. We are also marking all eligible minor beneficiaries with a bright yellow highlight.

We have also added a new View #3 to the Beneficiaries file, with a more explicit display of how the burden is borne separately for tax generated by the pre-residue vs. tax generated by the residue.

Finally, we have even added an option (right side of View #3) that will “equalize” the net amounts to children (minors and non-minors), in case parents want this result despite the new law. This entails allocating enough more to the non-minors so that, net of tax, they will get the very same net share that minors get free of tax.

02/14/2020

2020-045 release posted on 02/14/2020, 7 am.

Password:  showtime

Approved 2019 e-file for 1041, CT, DE, MA, NJ, NY, OH, PA, and VA

Approved 2019 paper file for 1041, CT, NC, PA, and WI.  Remaining states to follow shortly.

Approved 2019 706 and 709.

Revised PA Register of Wills and Orphans’ Court forms effective 01/01/2020.

Detailed update notes to follow.[/vc_column_text][/vc_tta_section][vc_tta_section title=”2019 Release Notes” tab_id=”2019-Release-Notes”][vc_column_text]

03/25/2019

Version 2019-081 has been posted on our website and is available for immediate download.  It includes the following state approvals:

e-file:           MA, NJ, NY, OH   (CT and PA previously approved)
paper file:  DE, IL, IN, VA, WI (MA, NC, and PA previously approved)

CT, NJ, NY, OH paper file approval imminent.  You can now e-file returns for all of four of these states without waiting for the corresponding paper filing approval.  The K-1s contain no watermark, and the other pages currently display “Client Copy”.

Fourth Release This Season
2019-032 (2/01/19)
2019-038 (2/07/19)
2019-060 (3/01/19)
2019-081 (3/22/19)

Effects of the TCJA of 2017

The TCJA of 2017 is turning out to be “a riddle wrapped in a mystery inside an enigma.”

There have been some unexpected downstream consequences of the elimination of Line 15c (Miscellaneous Itemized Deductions).  We believe that they are now resolved in this update.

There is, however, still some uncertainty in some circles over the right of a beneficiary to deduct (on Schedule A of Form 1040) excess deductions received from a final-year estate or trust.  As we wrote on 3/4/2019, in consultation with the IRS Office of Chief Counsel and others, we have reached the conclusion that they are *not* deductible in 2018 – 2025.  Our reasoning is contained in an extensive e-mail that we posted to the ABA Estate Planner’s and Estate Administrator’s List on 3/4/2019.  That e-mail is reproduced in its entirety in a help screen that you can access from the Excess Deduction line on the Master K-1 and on the individual K-1s.

An RIA Checkpoint of 3/7/2019 reaches the opposite conclusion, that excess deductions *are* deductible by beneficiaries.  We have forwarded our research to RIA, and are waiting review by the Thomson Reuters editorial team.

Highlights of this 2019-081 update

Late news:  We rarely see a 1041 marked as a Qualified Disability Trust.  We learned this morning, however, that the 1041 software included in update 2019-081 does *not* reflect the 2018 increase in exemption from $4,050 to $4,150 (even though it *is* reflected in the 1041-ES).   If you have such a trust, please contact us and we can make the change with you over a GoToMeeting session.

1) e-file:  MA, NJ, NY, OH approved

2) Paper filing:  DE, IL, IN, VA, WI approved

3) K-1, Box 11, Code A, Excess Deductions:  Checkbox option to suppress from K-1.  See help screen for discussion.

4) K-1, Box 14, Code I, Section 199A:

(a) Message on Where to Find Supporting Statement:  Now appears in the gray area in bottom right of the K-1.

(b) Section 199A Supporting Statement:  Now transmitted with e-file:  No need to attach a PDF.

5) Adjustments/Corrections:

Checkbox for “Revert to 3/1/2019”.  In the bottom right of Page 2 of Form 1041, Form 8960, and Worksheets W30 (Allocation of Expenses to Net Investment Income) and W32 (Section 199A Deduction), we have added a checkbox for “Revert to 3/1/2019”.  Checking this box will cause the calculations to ignore Adjustments/Corrections (d) through (i) below.  Thus, if these Adjustments/Corrections are de minimis, and you want to synchronize the return in 6-in-1 with the version that you have already filed and/or provided to fiduciaries and/or beneficiaries, just check this box for each affected return.

(a) e-file:  Miscellaneous Itemized Deductions (old Line 15c) no longer being fed to e-file.  This was causing 1041 rejections.  We corrected this for a number of you over GoToMeeting sessions by omitting this field from Page 1 and Schedule I for 2018 and later.  If you have any pending returns with this error, you may resubmit them after you install this update.

(b) e-file:  Form 1116.  The program has been adjusted to incorporate the two new checkboxes at the top of Form 1116 (a and b) and new Lines 23, 24, and 27.  If you have any pending returns with an error relating to Form 1116, you may resubmit them after you install this update.

(c) 1041 No Longer Defaults to pre-2018 Version of Form 1041, Page 1 (after e-filing a state return).  We had one report of this behavior, and were able to reproduce it.  The navigation quickly corrected itself once you clicked on any page button on the right panel, but we have now been able to prevent that initial navigation to the pre-2018 version of Page 1 of Form 1041.

(d) Worksheet W02 (2% Floor on Miscellaneous Itemized Deductions):  Because the 2% Floor is not applicable to tax years 2018 – 2025, we had suppressed the display (and calculation) of the entire Line 15c.  Because Line 15c is still relevant to the calculation of Accounting Income Available for Distribution, however, we again display (and calculate) that value in the first three columns.  We continue to suppress it in the DNI and Adjusted Gross Income columns because it is not relevant to those columns.

Also, we again display the L15c “Other/2%” amounts on the Numbers screen for information purposes, but show a gray background and a message that these amounts are not deductible in 2018 – 2025.

This change could have the following implications:

(i) Simple Trusts:  The Accounting Income “required to be distributed currently” on Schedule B, Line 9, could change.  This could change your Income Distribution Deduction, and therefore your tax result.

(ii) Form 8960:  This may or may not have any effect on your Form 8960 Net Investment Income Tax.

(iii) Form 1116:  If you had entered an amount on Form 1116, Line 20, for the tax on Form 1041, Schedule G, Line 1a, you may need to change it to reflect the change in tax on the 1041.  We now understand that Form 1116, Line 20, could default to the tax from Form 1041, Schedule G, Line 1a, and have made this change for the next update.

(e) Deduction for Taxes (Line 11, and Schedule I, Line 3):

(i)  Line 11:  SALT taxes + Foreign Income Taxes + GST Tax

(ii) Schedule I, Line 3 (“AMT L3”):  SALT taxes + Foreign Income Taxes (but not GST Tax)

Because you may have reduced your Line 11 tax deduction by the $10,000 limit on SALT deductions, we now display on AMT L3 the same amount that appears on Line 11.  But if your Line 11 tax deduction also includes GST Tax (not reportable on AMT L3), we provide you with the option to override the amount on AMT L3.

(f) Schedule I, Page1, Line 4 (Page “3” on our right-hand panel):  Although this line reads “Reserved for future use”, we were displaying (and calculating) a value for Miscellaneous Itemized Deductions (old Line 15c).  This value has been removed.  This would make an AMT tax difference only in situations where the AMT tax (after the AMT exemption) is greater than the regular tax.

(g) Form 8960, Line 9c (and W30 Allocations):  Line 9c (and corresponding lines on the W30 Allocations worksheet) have been modified to suppress old L15c (Miscellaneous Itemized Deductions).

(h) W32 §199A Worksheet (bright blue button on Page 1):

(i) Line 9 Total Income:  Label for “1 Total Income” changed to “9 Total Income”.  Displayed value changed from L1 to L9.

(ii) Allocation of DNI to fiduciary:  Changed from (B7 – B15) to (B7 – B12 – B15).  Thus, the portion of DNI deemed allocated to beneficiaries (for purposes of 199A) now includes tax-exempt income (Line B-12).

(iii) If DNI = 0, 100% Now Allocated to Fiduciary:  Previously, 100% was being allocated to Beneficiary(ies).

(iv) Changed line displays to reflect inclusion of B12 (tax-exempt income) in the allocation of DNI between fiduciary and beneficiaries.

(v)  W32 Section 199A Worksheet: Now appears in the Worksheets dropdown menu.

(i) Grantor Advice Letter:  Now suppresses display of Line 15c for 2018 – 2025.

6) 1041 Print Options:  The Print Required button now checks the K-1 box if there are any K-1s to be printed.

7) PA File Number:  If you have not yet received the file number from the Register of Wills, and have therefore not entered it, the file number field no longer displays “0000”.

8) e-file CT and OH:  Revised logic for scenarios where certain data must be transmitted even if its value is 0.

9) CT Accounting:  Added option to display header as A1 if you run B6 (“On Hand for Distributions to Beneficiaries”) for the period up until the day before the start of the current accounting.

10) OH IT-1041, Line 63:  Now defaults to Line 3 less Line 57 less Line 60.

11) VA-770, Schedule 3, Line 2:  Now defaults to the “Add-back for state return” on Line 11 of the Numbers screen for the 1041.

03/04/2019

Section 199A, 20% Qualified Business Income Deduction
[repeated from 2/11/2019 e-mail]
From late October 2018 through early February 2019 we spent significant time (approximately 250 hours) working through new Internal Revenue Code Section 199A that was introduced by the Tax Cuts and Jobs Act of 2017 (“TCJA”), which some pundits are calling the “Tax Jobs and Cuts Act of 2017″.  This section provides individual taxpayers (including estates and trusts) with a deduction of up to 20% of “qualified business income” received from one or more “passthrough businesses” (S corporations, partnerships, LLCs that do not elect to be taxed as corporations, and sole proprietorships reporting income on Form 1040, Schedules C, E, or F).

This section has an indirect impact on estates and trusts that may own interests in such businesses, with various elements of the calculation passed through to beneficiaries in proportion to their shares of DNI.

Final Regulations for Section 199A (all 247 pages of them) were released by the IRS on January 18, 2019.  The IRS projects that this calculation will affect 10M taxpayers and consume 25M hours, every year, for the next seven years, until the individual tax portion of the TCJA expires at midnight on 12/31/2025.  Based on a combination of choices that one can make when running these calculations, it is possible to come up with over 648,000 scenarios that must be handled.

Seven new modules for Section 199A have been added to NumberCruncher 2019.00, released on February 11, 2019:

http://support.newlacknersite.kinsta.cloud/msi/nc/

In addition, we have developed a first-of-its-kind visual, interactive, animated solution to these calculations that we believe will cut the learning curve from 30-40 hours to two or three hours.  You will hear more about this in the future.

[new in this e-mail]
In two of the three tax “zones”, these calculations can be extraordinarily complicated.  We call modified taxable income Zone 2 the “Twilight Zone” and Zone 3 the “No Zone”.  For 2018, Zone 2 kicks in at $315K married/joint ($157,500 all others), and Zone 3 at $415K married/joint ($207,500 all others).  The “all other” category includes estates and trusts.

Our 250-hour effort put us a bit behind schedule on the rest of the 2018 software, but did allow us to build an essential Section 199A worksheet that supports the deduction that must be claimed on Line 15a.  That worksheet is included in this update.  See below for details.

Highlights of 6-in-1 Update

General

1) Third Release This Season:

2019-032 (2/1/19)
2019-038 (2/7/19)
2019-060 (3/1/19)

Corrections made in 3/1/19 version
(a) 1041, Labels for Lines 18-21:  This year, for the first time since 1961, the IRS shifted the top 2/3 of Page 1 (from the Decedent’s estate checkbox down through Line 23) up a row in order to make space for new L24 and L25f.  As a result, we inadvertently positioned the label for “Income distribution deduction (L18) next to L21, and shifted the labels for L19-21 up to L18-20.  These labels have now been repositioned.  No change was necessary for the corresponding values, which were appearing in the correct locations at all times.

(b) Maximum Capital Gains Rates (0%, 15%, and 20%):  In our 2/11/2019 e-mail, we noted a new wrinkle caused by the TCJA and affecting Form 1041-ES.  Specifically, this related to the thresholds where the maximum capital gains rate changes from 0% to 15% to 20% which were now disconnected from the breaks in the Tax Rate Schedule.

This wrinkle also affected Schedule D (Lines 28 and 33), the Schedule D Worksheet (Lines 15 and 23), and the Qualified Dividends Worksheet (Lines 6 and 11).  Our calculations had a placeholder for this change (9999999), but the change was not fully implemented.  Therefore, under circumstances where the thresholds should have applied, they were not applied, and the resulting tax was 0.  You should check any returns that you have prepared where the maximum capital gains rate should apply.

(c) Excess Deductions:  Change to notes included in the 2/11/2019 e-mail.  No change to software.  Despite the 2018 Instructions for Schedule K-1 (Form 1041), Box 11, Code A, we now believe that beneficiaries may not claim excess deductions on Form 1040, Schedule A, Line 16 in 2018-2025.  This was based on a conversation with the IRS Office of Chief Counsel on 2/25/2019 and a closer analysis of Notice 2018-61.  To make a long story short, the issue depends on the definitions of “itemized deduction” and “miscellaneous itemized deduction”, which in turn depend on where such deductions are used (“above the line” to arrive at adjusted total/gross income on Form 1041 but “below the line” to arrive at taxable income on Form 1040).

Currently, the following instructions and publication confirm that excess deductions are not deductible by beneficiaries:

a) 2018 Instructions for Form 1040, Schedule A, Line 16

b) 2018 Publication 529, Page 4 (published on 1/31/2019, with no prior draft)

Apparently this could change with a change in the regulations.  Notice 2018-61 did invite comments on the issue, and the IRS is still accepting such comments.

We are still reporting excess deductions on Schedule K-1 for final-year returns (where applicable), in literal compliance with the 1041 instructions, but it would appear that beneficiaries should simply ignore this line.

Federal

2) Schedule K-1, Beneficiary SSN/EIN, Last Four Digits:  We have added an option for you to display only the last four digits of the beneficiary’s SSN or EIN, as permitted by the instructions.  Important:  the full SSN or EIN must still be displayed on the Schedules K-1 that are filed with the IRS.  1041 e-file will transmit the full SSN/EIN in all cases, whether or not the box is checked.

3) Print Options:  “Print Required” buttons have been added to the Print Options screen.

4) Fiduciary Income tax:

     e-file:              approved

5) Section 199A Deduction on Line 15a:  We have added an unavoidably intricate Worksheet W32 to support the Section 199A deduction that must be claimed on Line 15a.  Several comments:

   (a) Section 199A Button (Bright Blue):   appears on Page 1, right below Line 15a.

   (b) Numbers:  the following attributes of businesses owned by the estate or trust must be entered in the Relevant Passthrough Entity (“RPE”) section (bottom half):

Qualified Business Income (QBI)
Qualified REIT Dividends
Qualified PTP Income (Regular)
Qualified PTP Income (SSTB) *
W-2 Wages paid by the RPE ***
UBIA** owned by the RPE ***

* SSTB:  Specified Service Trade or Business (health, law, etc.)

** UBIA:  Unadjusted basis immediately after acquisition

** If the estate/trust’s modified taxable income is $157,500 or less, then W-2 Wages and UBIA are not needed in the calculation of the estate/trust’s QBI Deduction.  But the beneficiary shares of these amounts must still be reported on the K-1 to beneficiaries, whose personal modified taxable income might reach a level (>$315K married/joint or >$157,500 all others) where these numbers become relevant.

   (c) Allocation Between Fiduciary and Beneficiaries:  Based on relative shares of DNI, the above Section 199A amounts are allocated between the fiduciary and the beneficiaries.

 (i) Fiduciary’s Section 199A Deduction:  The worksheet computes this deduction, and adds it to L15a.  You should not enter a transaction for this deduction.  Your attachment schedule will not include this deduction in its subtotal.  For e-filing purposes, even though an attachment for L15a is transmitted to the IRS, there is currently no cross-check being done to compare the total of the attachment against the value reported on L15a.

(ii) Beneficiaries’ Section 199A Information:  The beneficiary shares of the elements of Section 199A are reported on Schedule K-1, Box 14, Code I.  There is an attachment schedule that can be printed with details for each beneficiary.  Just click on the right arrow in the lower right of Schedule K-1 to display (and print) that attachment.

States 

6) Pennsylvania (Montgomery County):  We are now displaying the Probate/Orphans’ Court file number as follows:

          2019-X1234

7) Fiduciary Income tax (e-file): 

CT:   approved
DE:  pending
MA:  pending
NJ:   pending
NY:   pending
OH:  pending
PA:   approved
VA:   pending

8) Fiduciary Income tax (paper filing):

CT:   pending (K-1 restructured this year; “Do Not File” watermark) *
DE:  pending
IL:    pending
IN:    pending
MA:  approved
NC:  approved
NJ:   pending **
NY:   pending **
OH:  pending (K-1 restructured this year; “Do Not File” watermark) *
PA:   approved
VA:   pending
WI:   pending

Except as noted above and below, watermarks do not appear on any these state returns.  Nevertheless, for states other than NC and PA (which have been approved), you should wait for a future update with approved state versions before filing paper returns with the remaining 10 states.

* For CT and OH, the information on the current version of the K-1 is correct for beneficiaries, and may be provided.  The restructured format will be available for filing by estates and trusts once we have received approval from CT and OH for the overall fiduciary income tax returns.

** NJ and NY still have “Do Not Mail” on the pages with 2D barcodes.  You may provide these pages to clients, but should wait for final approval (and updated 2D barcodes) before actually paper filing these returns.  Of course, when e-filing is ready for these states, the 2D bar codes will not matter.

02/11/2019

Annual Changes to 100+ Tax Return Pages

Each year, there are a thousand or so items that have to be tested throughout the software to reflect changes required in many of the 100+ tax return pages that we support.  Thus, it’s a highly iterative process that lasts from September until all forms are released by the IRS and state departments of revenue in final form sometime in mid or even late January.

Other Changes to 6-in-1 Made During the Past Year
These changes will be documented in a future e-mail.

Section 199A, 20% Qualified Business Income Deduction

From late October 2018 through early February 2019 we spent significant time working through new Internal Revenue Code Section 199A that was introduced by the Tax Cuts and Jobs Act of 2017 (TCJA), which some pundits are calling the “Tax Jobs and Cuts Act of 2017″.  This section provides individual taxpayers (including estates and trusts) with a deduction of up to 20% of “qualified business income” received from one or more “passthrough businesses” (S corporations, partnerships, LLCs that do not elect to be taxed as corporations, and sole proprietorships reporting income on Form 1040, Schedules C, E, or F).

This section has an indirect impact on estates and trusts that may own interests in such businesses, with various elements of the calculation passed through to beneficiaries in proportion to their shares of DNI.

Final Regulations for Section 199A (all 247 pages of them) were released by the IRS on January 18, 2019.  The IRS projects that this calculation will affect 10M taxpayers and consume 25M hours, every year, for the next seven years, until the individual tax portion of the TCJA expires at midnight on 12/31/2025.  Based on a combination of choices that one can make when running these calculations, it is possible to come up with over 648,000 scenarios that must be handled.

Seven new modules for Section 199A have been added to NumberCruncher 2019.00, being released today.  In addition, we have developed a first-of-its-kind visual, interactive, animated solution to these calculations that we believe will cut the learning curve from 30-40 hours to two or three hours.  You will hear more about this in our next communication.

Highlights of 6-in-1 Update

As you can imagine, the above work on Section 199A has put us a bit behind with our e-file testing approvals and our state paper-filing approvals for states other than NC and PA (which have been approved).  See below for details.

General

1) Second Release this season.

2019-032 (2/1/19) *
2019-038 (2/7/19) **

*  For the first time since 1961, when “Type of Entity” checkboxes were added to the upper left corner of Form 1041, the date range for fiscal year returns was moved to the right of the first checkbox.  This required a shift of all these checkboxes up one row.  The 2/1/19 did not catch this shift, so that the checkboxes were appearing one row below the corresponding labels (Decedent checkbox next to label for Simple Trust, etc.).  The 2/7/19 update resolved this issue.

** Because of this year’s major restructuring of Form 1040 (the first such major restructuring since 1921), the line references to Form 1040 contained on the K-1 instructions were changed in numerous places.  A later version of the 2/7/19 update, posted on 2/8/19, corrects these line references.  If you installed either the 2/1/19 or 2/7/19 versions, you could simply print out a copy of the 1041 K-1 instructions (Page 2 of the K-1 form) from the IRS website.  Then wait to install the next update (with various state approvals, etc.) to obtain these corrected instructions.

2) “Zoom” renamed to “Change Screen Resolution”.  A lot of users did not understand what “Zoom” meant, and would call in to change their screen resolution (larger or smaller).  As as result, we’ve renamed the button in the upper left corner of the 6-in-1 Main Menu from “Zoom” to “Change Screen Resolution”.  We hope that this makes that function more self evident.

6-in-1 zooms to 200% by default.  To change this, click on “Change Screen Resolution”, then choose the appropriate zoom level (top center):  100, 150, 200, or 300%.  This setting will stick until the next update, and applies to all users in a multi-user setting.

If you want to change that setting just for yourself and for no other users, scroll to the far right of the 6-in-1 Main Menu (by using the scroll bar at the bottom). At the top, change “Force Screen Size” to the desired zoom level.  This setting will last until you close 6-in-1.

Federal

3) Estate Tax Exclusion

2018:  $11,180,000 (was $5,490,000 in 2017)
2019:  $11,400,000

4) Gift Tax

Lifetime Exclusion
2018:  $11,180,000 (was $5,490,000 in 2017)
    2019:  $11,400,000

    Annual Exclusion
2018:  $15,000 (was $14,000 in 2017)
    2019:  $15,000

5) Fiduciary Income tax

Paper Filing:  final
     e-file:              pending

6) Form 1041-ES for 2018 and 2019.  Note a new wrinkle caused by the December 2017 tax bill:

Long-term capitals gains have three brackets:  zero, 15%, and 20%

2017:  LT Capital Gain Brackets match the Tax Rate Schedule:

Zero:  Up to $2,550
15%:  $2,551 to $12,500
20%:  Above $12,500

2018:  LT Capital Gain Brackets no longer match the Tax Rate Schedule:

Zero:  Up to $2,600          (Tax Rate Schedule still breaks at $  2,550 for 2018)
15%:  $2,601 to $12,700  (Tax Rate Schedule still breaks at $12,500 for 2018)
20%:  Above $12,700

2019:  LT Capital Gain Brackets no longer match the Tax Rate Schedule:

Zero:  Up to $2,650          (Tax Rate Schedule breaks at $  2,600)
15%:  $2,651 to $12,950  (Tax Rate Schedule breaks at $12,750)
20%:  Above $12,950

States 

7) Fiduciary Income tax (e-file): 

CT:   pending
DE:  pending
MA:  pending
NJ:   pending
NY:   pending
OH:  pending
PA:   pending
VA:   pending

8) Fiduciary Income tax (paper filing):

CT:   pending (K-1 restructured this year; “Do Not File” watermark) *
DE:  pending
IL:    pending
IN:    pending
MA:  pending (2K-1: “Client Copy” watermark; may provide to beneficiaries)
NC:  approved
NJ:   pending **
NY:   pending **
OH:  pending (K-1 restructured this year; “Do Not File” watermark) *
PA:   approved
VA:   pending
WI:   pending

Except as noted above and below, watermarks do not appear on any these state returns.  Nevertheless, for states other than NC and PA (which have been approved), you should wait for a future update with approved state versions before filing paper returns with the remaining 10 states.

* For CT and OH, the information on the current version of the K-1 is correct for beneficiaries, and may be provided.  The restructured format will be available for filing by estates and trusts once we have received approval from CT and OH for the overall fiduciary income tax returns.

** NJ and NY still have “Do Not Mail” on the pages with 2D barcodes.  You may provide these pages to clients, but should wait for final approval (and updated 2D barcodes) before actually paper filing these returns.  Of course, when e-filing is ready for these states, the 2D bar codes will not matter.

DecoupleCruncher

9) Year 2019 Added to Dropdown Year Menu.

10) Exclusions for 2019 (changes in blue).

 CT:   $  3,600,000
DC:  $  5,681,670
HI:    $  5,490,000
IL:    $  1,000,000
MA:  $  1,000,000
MD:  $  5,000,000
ME:  $  5,700,000
MN:  $  2,700,000
NY:   $  5,740,000
OR:  $  1,000,000
RI:    $  1,561,719
VT:   $   2,750,000
WA:  $  2,193,000[/vc_column_text][/vc_tta_section][vc_tta_section title=”2018 Release Notes” tab_id=”2018-Release-Notes”][vc_column_text]

02/27/2018

Version 2018-058 has been posted on our website and is available for immediate download.

Highlights of 6-in-1 Update

Each year, there are a thousand or so items that have to be tested throughout the software to reflect changes required in many of the 100+ tax return pages that we support.  Thus, it’s a highly iterative process that lasts from September until all forms are released by the IRS and state departments of revenue in final form sometime in mid or even late January.

General

1) Fifth Release this season.  12/1/17, 1/23/18, 2/7/18, 2/9/18, 2/27/18.

This is a “minor” update (transaction records not reimported).  This makes the update process much faster.

2) e-file Color Blocks Serve as “Filters”.  At the top of the list of tax returns (left half of the e-file Center), there are five colored blocks (one set for federal, another set for state). The status for each block is listed at the bottom of the e-file Center (Not Submitted, Pending, Accepted, Error LGI, Rejected IRS).  If you click on a colored block, you will narrow the list of returns to just those with that status.

Trick:  If you Shift-Click on the Green or Blue blocks, you will get a list of all Pending and all Accepted returns.

3) Zoom.  6-in-1 now zooms to 200% by default.  To change this, click on “Zoom” (upper left of 6-in-1 Main Menu screen), then choose the appropriate zoom level (top center):  100, 150, 200, or 300%.  This setting will stick until the next update, and applies to all users in a multi-user setting.

If you want to change that setting just for yourself and for no other users, scroll to the far right of the 6-in-1 Main Menu (by using the scroll bar at the bottom). At the top, change “Force Screen Size” to the desired zoom level.  This setting will last until you close 6-in-1.

Federal

4) Estate Tax Exclusion ($11,180,000).  We have recently seen the first quasi-official confirmation of this amount.  On February 7, 2018, the Joint Committee on Taxation published JCX-3-18 entitled “Overview Of The Federal Tax System As In Effect For 2018”.  On page 18 of this overview, it refers to a credit of $4,417,800 that “effectively exempts a total of $11.18 million (for 2018)”.  See link below:

JCX-3-18

This number is not the $11.2M (or even $11.21M) that many expected.  This results from the tax bill’s use of the “Chained CPI-U” (“C-CPI-U”) for the 2016=>2017 increment in the exclusion.  This C-CPI-U typically grows at a slower rate than does the regular CPI.  Even though its values are subject to adjustment for up to a year after they are published, the new tax bill has a specific provision for this.

For purposes of inflation adjustments based on the C-CPI-U, the values to be used are the latest values published as of the date that the Bureau of Labor Statistics publishes the initial value of the C-CPI-U for the month of August (i.e., 2017).  Thus, the C-CPI-U values published in about mid September for the 12 months ending on August 31 are used to set the inflation rate for the following calendar year (i.e., 2018) without any further adjustment.

5) Form 1041-ES for 2018.  Released by the IRS on 2/23/2018 (last Friday). Changes are incorporated in this update.  Note a new wrinkle caused by the December 2017 tax bill:

Long-term capitals gains have three brackets:  zero, 15%, and 20%

2017:  LT Capital Gain Brackets match the Tax Rate Schedule:

Zero:  Up to $2,550
15%:  $2,551 to $12,500
20%:  Above $12,500

2018:  LT Capital Gain Brackets no longer match the Tax Rate Schedule:

Zero:  Up to $2,600          (Tax Rate Schedule still breaks at $  2,550)
15%:  $2,601 to $12,700  (Tax Rate Schedule still breaks at $12,500)
20%:  Above $12,700

6) e-file:  Multiple Button Clicks.  Several users reported that clicking the e-file button didn’t actually send the return.  It turns out that, in release 2018-040, we inadvertently left a box checked (for testing purposes) that assembled the return but didn’t actually submit it.  This process then cleared the checkbox.

With the existing software, the solution was to click the e-file button a second time.  This issue has been resolved with today’s update.

States 

7) Fiduciary Income tax (e-file):  

NJ-1041      (approved)
NY IT-205    (approved)
OH IT-1041 (approved)
PA-41          (approved)

Other states in process for e-file:  CT, DE, IL, MA, VA, WI

States not yet supporting fiduciary income tax e-file:  IN, NC

8) Fiduciary Income tax (paper filing):

CT:   approved
DE:  approved
IL:    approved
IN:    approved (2/27/18):  on right panel, click into “Code to Remove” field, enter 4104.
MA:  approved
NC:  approved
NJ:   pending
NY:   pending (form substantially redesigned)
OH:  pending (form substantially redesigned, including new Page 6)
PA:   approved
VA:   approved
WI:   approved

Watermark:  We have changed the watermark that appears while state approval for paper filing is still pending:

1. Main pages:  “Client Copy” (instead of “Approval Pending.  Do Not File”).
2. K-1s (or their equivalents).  No watermark.  These forms are not filed.  This will allow you to provide these forms to your clients to pass along to their tax preparers.

9) 2016 State e-file. Several users reported issues with e-filing 2016 returns.  We have resolved that issue by (a) setting a variable to “2016” when the “2016” button at the top of the e-file Center is selected and (b) making sure that a specific field (“StateSubmissionIdCurrent”), no longer required for 2017, is still transmitted for 2016.

10) 2017 State e-file Fiduciary SSN/EIN.  These IDs are not required for 2017 returns.  Thus, the error condition for missing Fiduciary SSN/EIN has been removed.

11) IRD Adjustment on Separate PA-41 Estate and Trust Returns (related to a 1041 in which a Section 645 election is made to combine estate and trust returns ).  The IRD adjustment on PA-41 Schedules A and B now brings in the amount from the appropriate 1041 (estate or trust) rather than the IRD amounts for the estate and trust(s) combined.

12) CT-1041, Schedule B Attachment.  Now available for printing from the CT-1041 K-1 screen.

13) NJ-1041, Schedule B Attachment.  Now available for printing from the NJ-1041 K-1 screen.

DecoupleCruncher

14) Year 2018 Added to Dropdown Year Menu.

15) New Exclusions for 2018.

CT:   $  2,600,000
DC   $11,180,000
HI     $11,180,000
MD   $  4,000,000
ME   $11,180,000
MN:  $  2,400,000
RI:    $  1,537,656
WA:  $  2,193,000

Because the DC and ME (Maine) exclusions are now higher than the top of the 2017 tax brackets for these two jurisdictions, the departments of revenue themselves are not certain how these tax brackets will be applied for 2018.  DecoupleCruncher currently displays “Estimated” next to the 2018 results for DC and Maine.

02/09/2018

Version 2018-040 has been posted on our website and is available for immediate download.

New Tax Bill 

On December 18, 2017, Vince Lackner had an article about the new tax bill published in Leimberg Information Services (“LISI”) online newsletter service for estate planning professionals.  This article includes five charts that illustrate the essence of the bill.  Below is a link to that article for your light bedtime reading:

https://newlacknersite.kinsta.cloud/tax-bill-epic-battle-between-pure-speculation-and-absolute-certainty/

This is also accessible from The Tax Bill tab in the upper right section of our website.

Highlights of 6-in-1 Update

Each year, there are a thousand or so items that have to be tested throughout the software to reflect changes required in many of the 100+ tax return pages that we support.  Thus, it’s a highly iterative process that lasts from September until all forms are released by the IRS and state departments of revenue in final form sometime in mid or even late January.

General

1) Fourth Release this season:  We posted three unannounced versions on our website earlier this season:

a) 12/01/2017:  709, 1041, and PA-41 (paper filing).  All approved except for PA-41 RK-1/NRK-1

b) 01/23/2018:  1041 and PA-41 e-filing.  Approved several days later, with one change (Form 1041,Schedule E, needed to transmit amounts on Page 2).  This represents a reasonably rare
circumstance that was resolved in update (c) below.

c) 02/07/2018:  See highlights below

d) 02/09/2018 (today):  Reversed a change we had made to US Form 8960, Line 21, to match a flawed IRS test scenario.  The calculation again rounds to the nearest integer (up if 0.50 or more) rather than truncating (rounding down to the nearest integer for all decimals up to 0.99).

For those who installed (c) above, (d) is a “minor” update (transaction records not reimported).

Update (a) above allowed several users who needed to prepare some early returns to get started.

Federal

2) Indexed Amounts for 2018: Based on the Chained CPI-U (All Urban) (per the new tax bill), we were able to calculate the average for September 2016 through August 2017. Based on this average, we are projecting that the new amounts for 2018 will be as follows (not yet announced by the IRS):

a) Basic Exclusion Amount:     $11,180,000

b) Basic Credit Amount:           $  4,417,800

c) Annual Gift Tax Exclusion:  $       15,000

States 

3) Fiduciary Income tax (e-file):  

NJ-1041 (approved)
NY IT-205 (pending – late stages)
OH IT-1041 (pending – late stages)
PA-41 (approved)

Other states in process for e-file:  CT, DE, IL, MA, VA, WI

States not yet supporting fiduciary income tax e-file:  IN, NC

4) Fiduciary Income tax (paper filing):

CT:   pending (pages 1-3 reformatted by the Department on 1/9/2018)
DE:  approved
IL:    approved
IN:    pending
MA:  approved
NC:  approved
NJ:   pending
NY:   pending (form substantially redesigned)
OH:  pending (form substantially redesigned, including new Page 6)
PA:   approved
VA:   pending
WI:   pending

Watermark:  We have changed the watermark that appears while state approval for paper filing is still pending:

1. Main pages:  “Client Copy” (instead of “Approval Pending.  Do Not File”).
2. K-1s (or their equivalents).  No watermark.  These forms are not filed.  This will allow you to provide these forms to your clients to pass along to their tax preparers.

Because we received approval (without changes) for DE and IL after posting today’s update, you may remove the watermark as follows:

To remove watermarks:

On Page 1 of return, right panel, Shift-Click into the “Code to Remove” field, enter this number:

DE:  4102

IL:    4103

5) NC Accounting (AOC-E-506, Rev. 12/17):  Changes made.

6) PA:  Affidavit of Non-Subscribing Witness:  Notary block added in lower right portion of page.

7) PA:  Notice of Estate Administration (RW-07):  Option to enclose Will reinstated.

8) PA:   Petition for Adjudication (OC-01):  Compliance with new Public Access Policy added for sections 6, 9A, 10, and 20A/B.  Entering a minor’s initials will redact the minor’s name, date of birth, and address.  We redact the address even though the Policy does not require it, because we believe that this information is just as sensitive as the date of birth.  On the other hand, one could readily determine a minor’s address based on unredacted address information provided for other members of the same family.  We will await clarification when the Commonwealth revisits these issues this spring.

9) PA:  Interest rate for 2018 included (4%, or .000110 per day).

10) 6-in-1 Main Menu, State Fiduciary Income Tax buttons:  2017, 2002–2016.  Breaking this dropdown menu into two parts will save you an extra button click all season long.  If you intend to prepare a 2016 return (for example), be sure to click on the 2002–2016 button. Otherwise, you will be starting a 2017 return (which you can use at a later time).

11) NJ Estate Tax:  eliminated starting in 2018

11) DE Estate Tax:  eliminated starting in 2018[/vc_column_text][/vc_tta_section][vc_tta_section title=”2017 Release Notes” tab_id=”2017-Release-Notes”][vc_column_text]

09/11/2017

Highlights

1) Indexed Amounts for 2018: Based on the CPI-U (All Urban) released today (9/14/2017) for August 2017, we were able to calculate the average for September 2016 through 2017. Based on this average, we are projecting that the new amounts for 2018 will be as follows:

a) Basic Exclusion Amount: $5,600,000

b) Basic Credit Amount:       $2,185,800

c) Annual Gift Tax Exclusion:  $15,000

2) 706 (August 2017)

This version, released by the IRS in final form on 9/6/2017, is the first update to the 706 since 2013. Changes include the following:

a) Restored Exclusion (new Line 9c): This exclusion is available only to same-sex couples where the first spouse could not claim a marital deduction for transfers to the surviving spouse based solely on the application of DOMA (the “Defense of Marriage Act”). Now, the first estate may recover the applicable exclusion based on the availability of the marital deduction, pursuant to the decision of the Supreme Court in United States v. Windsor (2013).

See Notice 2017-15

See also the help screen next to Line 9c (small blue rectangle with a question mark).

If the limitations period under IRC § 6511 has expired, the first estate may still claim the marital deduction and recalculate the DSUE, but may not obtain a credit or refund. The second estate, however, may use the recalculated DSUE from the first estate.

Nuance: any gift tax paid (but not refunded because the limitations period has expired) will still be treated as gift tax paid for purposes of Line 7 of the 706 in the first estate.

b) Statement at Top of Page 1: If the estate is claiming a Restored Exclusion, it must display the following statement at the top of Page 1:

“FILED PURSUANT TO NOTICE 2017-15”

We now provide a checkbox at the top of Page 1. Checking this box will display this statement.

c) TG 7 Worksheet: There is some minor wording changes in several of the column headers (including (h)) to reflect the availability of the Restored Exclusion.

d) Schedule Header Note: The reference to Reg. section 20.2010-2T has been removed from all schedules.

e) Line 3b (IN and OH): Removed IN inheritance tax and OH estate tax for decedents dying on or after 1/1/2013 (when both of these state taxes were rescinded).

3) 709 (2017): This form is available only in draft, so we have not yet activated it in 6-in-1 (although we have built in most of the required changes, mostly based on the same Restored Exclusion now available for the 706). We wil document the changes in the next update, once the IRS releases the 709 in final form.

States

4) CT-706/709 (2017)

5) CT-706 NT (2017)

6) CT Inventory (PC-440): Cover pages 1-3.

7) CT Financial Report (PC-246): Cover pages 1-4. This implements CT’s optional “simplified” accounting.

8) MA Inventory (MPC 854): Cover pages 1-3.

9) MA Accounting (MPC 853): Cover pages 1-5.

10) NJ Estate Tax Return (2017): Note that the exclusion has been increased from $675k to $2m, and the calculation is now circular (the NJ estate tax is itself a deduction in determining the base on which the NJ tax is determined). Our calculations match those of NJ’s online calculator to the dollar. Note that the NJ estate tax is schedule to go away entirely starting in 2018.

11) VA Inventory (CC-1670): Added pagination. Added unit values.

12) VA Accounting (Estate and Trust) : Refined these modules in a variety of ways, including the addition of the following schedules that are available on the Print Options screen (for both Principal and Income):

a) Assets on Hand

b) Investments Made

c) Changes in Holdings

Also, added pagination to attachment schedules.

13) WI Inventory (PR-1811): Minor change to cover page.

04/03/2017

1) e-filing Statistics (returns accepted through 3/30/2017):

1041: 1,053
PA-41: 496
NY IT-205: 25

2) e-file (federal and state)
: may e-file for 2014-2015-2016 returns. Next year it will be for 2015-2016-2017 returns, etc.

3) PDF attachments
: Your scanner must produce PDF files that are compatible with Adobe Acrobat 8 or higher.

4) State e-file (OH, NJ, NY, and PA)
: MUST enter an “OfficerID” (EIN or SSN of fiduciary). Otherwise, your return will be rejected.

5) PA-41 e-file Rejections
: some returns have been rejected because the system wasn’t finding a StateSubmissionIdOrig. This issue has been resolved. You should resubmit your return if you see this error (More…, Errors STATE).

6) PA-41 Fiscal-Year Rturns
: may now e-file for fiscal-year returns (starting with 2016 returns).

Changes from 2017-088 to 2017-089

CT-1041
Form K-1T signature block conformed to changes on 2016 form

Schedules C, FA, Payment Voucher, and Extension Request: Eliminated truncation of labels by reducing space between lines

MA Form 2
Schedule D, Lines 12 Reference to gain portion of 1041, Schedule D, Lines 1a, 1b, 2, and 3 corrected
Schedule D, Lines 18 Reference to loss portion of 1041, Schedule D, Lines 1a, 1b, 2, and 3 corrected
Schedule B/R: Hyphens removed from beny SSN/EIN field
Schedule B/R: Lines 2 and 4 (lower right corner, for all benys combined) now appear unconditionally
Schedule B/R: Total Income displays each benys share Lines 2 and 4 if both boxes checked.

US 709
Page 4, Schedule C, Details button now navigates properly to 2016 version of Details, then back to 2016 version of Pg 4.

Changes from 2017-086 to 2017-088

Form 2848
Informational watermarks (1040/706, 1041, 8979) removed from printing

CT Schedule I
Minor changes made to threshold amounts for 2016 return

OH Schedule K-1
Minor changes made to conform to revised version issued by Department in February 2017

2D Barcodes for CT, MA, NY, and OH
2D barcode procedure refined (including auto download of required ScriptMaster plug)

Paper Returns

Federal: all approved

CT, DE, IL, IN, MA, NC, NJ, OH, PA, VA, WI: approved

NY: We are now in our 6th round of testing. Final results expected on Friday, 3/31/2017.

Remaining issue involves removing a zero value from the 2D barcode data when the form displays a blank. The NY specs state, in effect, that the 2D barcode may display either a blank or a 0 for a zero-value field. Nevertheless, the NY Department has asked us to remove the 0 from the 2D barcode so that a blank line in the 2D barcode exactly matches a blank field on the printed form.

e-filed Returns

1041: approved (1/10/2017)
PA: approved (1/23/2017, at 9:07 am)
NJ, NY, OH: approved week of 3/20/2017
DE, CT, IL, MA, VA: in development
WI: deferred to next season
IN, NC: not yet available from the respective states

02/03/2017

Version 2017-033 was posted this morning and is available for immediate download.

For multi-user installations, please remind your IT experts (who may not be reading these e-mails) that it takes a full 25-30 minutes for users to regain 6-in-1 desktop access after the FileMaker Server service has been restarted after the update is run. We receive frequent calls from users who launch 6-in-1 and receive a blank gray screen. The solution is simply to wait the full 25-30 minutes before relaunching 6-in-1.
Paper Returns

Federal: all approved

CT, NC, PA, WI: approved
DE, IL, IN, MA, NJ, NY, OH, VA: in process
The “Do Not File” watermarks have been removed from K-1s for these states so that you can provide them to beneficiaries without delay.

e-filed Returns

1041: approved (1/10/2017)
PA: approved (1/23/2017, at 9:07 am)
NJ, NY, OH: in process
DE, CT, IL, MA, VA: in development
WI: deferred to next season
IN, NC: not yet available from the respective states

You may now e-file any and all 2014, 2015, and 2016 federal and PA returns (but fiscal-year PA returns only for 2016). You may have prepared draft 2016 returns on the 2015 forms. With the current update, be sure to prepare and submit 2016 returns on the 2016 form. Once the 2016 e-file “schema” became operational for 2016 returns (as of 1/6/2017), these returns must be submitted on the 2016 form or else they will be rejected.

Yesterday we completed the final implementation of the DeviceID portion of the IRS’s anti-fraud requirements. We were able to identify the serial number of “PhysicalDrive0” and include it (together with the smBIOS of the transmitting PC) in “hashed” format as part of the e-filed return.

We also analyzed all of last year’s rejected returns (virtually all of which were successfully resubmitted), and pinpointed the various reasons for initial rejection. We now provide you with “soft error trapping” for 78% of these rejections. This means that we alert you (via pink shading on buttons or in fields) to issues of missing, incomplete, or incorrectly formatted data. This shading may appear on screens in General Information, Transact, Edit Beneficiaries, 1041 forms or schedules, or the e-file Center, but will not prevent you from e-filing. A return with uncorrected errors, however, will be rejected. Once you correct each issue, the pink shading will disappear.

The most common errors (representing a combined 37% of all rejections) relate to:

12%: PTIN missing/incomplete
10%: Beneficiary SSN/EIN missing/incomplete
5%: Grantor First Name missing(for trusts whose EINs were obtained online)
4% Submitting on wrong year’s form
3% Preparer Telephone Number missing (where “Discuss with IRS” box is checked
3%: Fiduciary 8879-F signature date not set to current year (2017)

In order to provide a consistent meaning for the pink shading, we have changed the shading in Transact for items marked as IRD. Instead of pink shading in the IRD, 706, PA-1500, and Accounting Principal fields, we now use light green shading for the IRD field and a light-green block on the far right of the other fields.

Other Changes

Starting with the November 2016 update, we made changes to the following modules:

1) CT-706/709 and CT-706 NT: 2016 forms incorporated (CT-706/709 now seven pages and “scannable”)

2) MA M-706: 4/16 form incorporated (now five pages)

3) NY ET-706: 4/16 form incorporated (released by NY on 11/24/2016)

4) CT Inventory (PC-440 REV. 1/17): We have just learned of this new version which will require some structural changes within 6-in-1. It is on our list for one of the next updates.

5) DE Accounting (N.C. 30, 9/18/16)

6) PA Notice of Estate Administration (RW-07): When the PA Supreme Court revised 10 probate forms effective 9/1/2016, we learned that we had to make our forms exact duplicates. Thus, we had to remove some useful variations that we built in over the years. This included the option to switch from the option to enclose a copy of the Will to the default language about obtaining the Will or Petition from the Register of Wills.

7) PA Accounting, Verification Page, Request for Distribution: For years, we have provided a checkbox at the bottom of the Verification Page, right panel, to force the display of the Request for Distribution language. Because a local Allegheny County rule now requires this language, we now display this language automatically for all Allegheny County estates.

8)e-file Center, Get Status (All): We have finished extending this function from 2014/2015 to 2016. Now, regardless of the year that you specify (upper left of the screen), navigating to the e-file Center will automatically refresh the status for all returns that are pending for the selected year.[/vc_column_text][/vc_tta_section][vc_tta_section title=”2016 Release Notes” tab_id=”2016-Release-Notes”][vc_column_text]

06/20/2016

A) No Attachments to Schedule A: Draft 8971 instructions released by the IRS on 6/6/2016 make the point (three times) that *nothing* should be attached to Schedule A (at least the copy being filed with the IRS). This guidance is somewhat unexpected, because the understanding among many speakers around the country has been that one could attach EVP reports (see below) or basis adjustment information. Note that the official publication date is September 2016, so this new “no-adjustment” rule will not be binding until then.

B) Estate is All Cash, IRD, Tangibles Each Worth $3K or less, or All Sold: Based on informal guidance from the IRS, we now understand how to handle estates where there is no property to report on Schedule A (because it consists of only cash, IRD, household goods/personal effects worth $3K or less, and/or property that has been sold): DO NOT FILE FORM 8971.

C) Beneficiary Percentage: In last week’s update, we added the parenthetical “(of 1,000 shares)”, where a beneficiary percentage is displayed (because less than 100%) and “1,000 shares” represents the number of shares as reported on the 706. If some of the asset has been sold, the beneficiary percentage will still be based on the entire asset owned at death (before any sales).

D) Duplicate Reporting: In last week’s update, we added the phrase “Duplicate Reporting” to the Beneficiary Percentage line in the description column on Schedule A, where there is uncertainty about which benys will receive what property. In that case, the IRS instructions and proposed regulations state that Schedule A should show 100% of this property going to each beny. Once actual distributions are made, there is no obligation to file a Supplemental Form 8971 or Schedules A.

E) Proposed Disclaimer: Consider attaching the following disclaimer (or some variation thereof) to each beny’s copy of Schedule A in the case of “duplicate reporting” (Courtesy of Martin M. Shenkman, Esq., Martin M. Shenkman, PC):

“The listing of assets on Form 8971 is a mere guesstimate based on current data as to which assets will be distributed and to whom. The personal representative has not made final determinations and the allocation may change, assets may be sold, and other changes may occur, and if so a supplemental filing may be made (but is not required). There is no intent that a designated beneficiary draw any conclusion that an asset listed will in fact be distributed to that beneficiary, except to the extent of any partial distribution heretofore. The indication of assets and their distribution is being made at this time to comply with the filing requirements of Form 8971 and not to confirm any legal decisions as to distributions by the personal representative. Therefore, no beneficiary should take any action based on the information disclosed in this filing.”

F) EVP Reports: Schedule A refers to the 706 item that, in turn, refers to an EVP attachment. Some options, subject to eventual guidance from the IRS:

(i) Single beny: single item on each Schedule A that refers to the single item on the 706.

(ii) Multiple benys, consistent proportions of each security: same as (i) above, but with each beny’s percentage interest noted.

(iii) Multiple benys with varying proportions of each security: probably need to enter each security on Schedule A.

In all cases above, could refer to 706 item number as “1-01”, “1-02” (etc.) with the “01” (etc.) referring to the item number on the attached EVP report.

G) Funded Revocable Living Trusts: Several customers have asked how to handle the scenario where there is a funded revocable living trust that is reported on Schedule G. The question was important because some of the accounts in the trust were managed accounts holding 600 or more securities each. Thus, every month after death there were numerous partial sales of assets before distributions. The issue is whether the “transfer” from estate to trust at the moment of death is the only transfer that needs to be reported. On this theory, distributions to life tenants or remainderman during the next decades or centuries would not trigger a duty to file Supplemental 8971s or Schedules A.

If so, the executor furnishes a single 8971 to the trustee of the trust (either by listing each security owned at death, or by entering a single item on Schedule A that refers to a 706 with a single item whose details are listed on an attached EVP report). Otherwise, the tracking of multiple such accounts just for 8971 purposes could cost thousands of dollars or more in preparation time.

The penalty for failing to file an 8971 and related Schedules A would be a single $260 (for the combined IRS filing), plus $260 for each Schedule A not furnished to benys. Given the confusion surrounding the Supplemental Transfers issue, it may be practical to treat the 8971 furnished to the trustee as the end of 8971 reporting obligations for that trust One could then weigh the risk of incurring the penalties ($260 + $260 x # of eventual benys) vs. the cost of “over-complying” with ambiguous instructions and regulations.

H) Portability-Only 706s: Note that the test for whether a return is “portability only” (and thus exempt from 8971 reporting) is whether the gross estate (Line 1) plus adjusted taxable gifts (Line 4) exceeds $5.45m (for 2016). Deductions are disregarded for this purpose.

I) 8971 Reporting of Marital/Charitable Property:The status of property as marital or charitable has nothing to do with whether it should be reported on Schedule A of the 8971. If the estate is large enough, ALL of this property must be reported on Schedule A, unless it meets one of the four exceptions (cash, IRD, tangibles worth $3K or less, or property that has been sold). The property’s marital or charitable status *does* affect the answer to the question on Schedule A of whether the property increases estate tax liability (always “N” for such property).

J) Decedents Dying Before 5/1/2014, Amended On/After 8/1/2015: No 8971 required. By regulation, a return may not be amended after the due date plus extensions (even though supplemental information may be provided). Reg. §20.6081-1(d). Because such supplemental information (submitted after the due date plus extensions) is not considered a “return”, it is not subject to 8971 reporting.

K) Zoom: Because monitor resolution is getting higher and higher, 6-in-1’s default zoom of 150% tends to display the program at too small a size. Therefore, we have changed the default zoom to 200%. If you find that this is too large, just click on the Zoom button (upper left corner of the 6-in-1 Main Menu) and change the setting back to 150%.

L) NY Inventory: Because the NY Inventory format was radically changed several months ago, different destination letters are now generated by 6-in-1 codes.

Solution for each estate (in the Transact file):

1) Search (button on lower left of Transact screen)

2) Inventory field: enter an asterisk

3) Perform Search

Lower right panel of Main screen (in Transact): Alt-Click on the “Reset Inventory Results” button (you might have to scroll down to see it).

03/24/2016

Quick Tips

• After an update is installed, click on the Zoom button (upper left corner of the 6-in-1 Main Menu) and choose 200 (top center of screen). Test whether this is the correct zoom level by clicking on the “mountain” buttons on the lower left corner of the screen.
• Shift-click on the 6-in-1 button in the top right corner of any screen to return instantly to the 6-in-1 Main Menu.
• 8971: 6-in-1 Main Menu, right panel: tiny blue block to left of estate name indicates an estate of a decedent dying on/after 5/1/2014 with an estate (gross plus adjusted taxable gifts) exceeding the basic exclusion amount for that year ($5.34m in 2014, $5.43m in 2015, and $5.45m in 2016). These estates would all have due dates (including extension if applicable) of 8/1/2015, and thus be subject to the new 8971 reporting requirements. The new due date for that form is now 6/30/2016.
• 8971: the only way to get information on to Schedule A of the 8971 is to allocate assets to beneficiaries. This must be done in the asset Distribution records (which may also be marked as going to specific beneficiaries) are disregarded. Also, Form 8971 will list only beneficiaries receiving some or all of at least one reportable asset. Thus, if no beneficiaries are receiving any reportable assets (i.e., the entire estate was cash or all assets were sold), then you must still file Form 8971, but would not attach any Schedules A.
• 706 extensions: you might consider filing a protective 706 extension in most or all estates. This will provide you with an extra six months (plus 30 days) within which to file Form 8971 (if applicable). It also reduces the risk of missing the deadline for electing portability. Once this deadline is missed, it can be difficult (if not impossible) to secure IRS relief.

e-file

• Missing PTIN: e-filing will now blocked if the PTIN is missing (General Information, Preparer section). This has been the most common cause of returns that are being rejected by the IRS.
• e-file Center: an apparent “record-locking” issue (“Another user…” error message when clicking on the e-file Center button the 6-in-1 Main Menu) has been resolved.
• e-filing statistics: we have now had nearly 1,400 returns e-filed since 1/8/2016. This represents a combination of 2014 and 2015 returns for the 1041, PA, NY, NJ, and OH (2015 only for OH).

1041

• Grantor Advice Letter: the short-term and long-term gain/loss lines should have been including gains/losses from the new 8939 transactions marked with boxes A-F. This issue has been resolved.
• Schedule G, Line 2a (foreign tax credit): the override field for this line has been removed. For e-file purposes, this value must come from a related Form 1116, Line 30. Otherwise, the e-filed return will be bounced by the IRS.

Auxiliary 1041 Forms and Schedules

• Multiple copies of C, E, F, and 1116: note new buttons on the right panel that allow you to create as many as five (5) additional copies for each estate or trust.
• Depreciation from 4562 => C, E, F: note a new button on each of these schedules that lets you bring in the depreciation amount from the 4562. Note that this feature will let you bring in the amount only from the first 4562. A future release will allow you to connect a 4562 with a particular C, E, or F.
• 1041-ES: on the vouchers, the year now displays “2016” rather than “2015”.
• 5227 Worksheets: the ANII column has been activated on Line 1 for 2014 and 2015.

Edit Beneficiaries (accessed from the K-1 Master screen)

• the tab key will now move the cursor from the Last name field to the First name field (and no longer jumps to the Middle name field).

PA-41

• Schedules A and B use the “Other reduction adjustments” line to report IRD (that is not taxable on the PA-41). This reduction draws from the “IRD Portion” amounts on the bottom of the Numbers screen in the 1041. Those fields, in turn, were getting their values only from the first transaction marked as IRD. A “sum” function has been added so that the fields will reflect the sum of all IRD transactions.
• Schedule A, Line 11: this amount was being included in the subtotal, but was not printing. It is now printing. It was being used in the e-file process at all times.
• Schedules C, E, F: a new button at the top allows you to import the values from the corresponding 1040 schedules.
• Schedule B, Lines 3: in one scenario (when Line 2 was empty), Line 3 was accumulating its amount, rather than recalculating from a baseline of zero. This issue has been resolved.

IN IT-41

• We have added the new IN K-1 so that you can provide these schedules to beneficiaries without further delay. We are still working on obtaining IN Department approval for the IN IT-41 and K-1 for filing purposes. Indiana was extremely late in accepting these forms for testing (not before 1/26/2016). By that time, we had moved on from the fiduciary income tax returns to the challenging 8971.

OH IT-1041

• e-file: a few users received an error message regarding “OH Taxable Income”. This occurred only if Schedule C was reporting zero income on Line 49. Although zero was the correct amount, this is a required field and must be included (with a zero value) on the e-filed OH return. This issue has been resolved.

Transact

• 706 Screen: note new button to “Find All 706 Asset Records”. This can be useful when you’re working with transactions relevant to Form 8971.
• Code 116.35 (amortization of bond premium): we now prompt you for a Bank In name.
• Code 116.9 (Farm expense): now defaults to the income deduction schedule for accounting purposes.
• Input Statements (in 1041, PA-41, etc.). In connection with our 8971 work, an issue arose where clicking on New Transaction would appear not to create a new transaction. In fact, it was creating a new transaction that was blank and not connected to the line/schedule you’re in. This issue (which arose only if you left the Name field empty on the previous New Transaction) has been resolved.

706

• portability transactions: amounts to spouse (Schedule E-1) will not include only 50% of the gross amount (not 100%) on Page 3, Lines 10 and 23. The previous use of 100% made no tax difference (because portability amounts are a wash on assets and deductions), but we have concluded that reporting at 50% is probably the right result.

PA-1500

• Schedule O (2-16): the PA Department revised this form in minor ways, and posted this new version with a 2-16 revision date. The revisions included (a) the revision date (as expected), replacement of “insert” with “use” (at the bottom), and addition of “paper of” (also at the bottom). In fact, we did change the revision date in the bottom right, but did not change it in the upper left (still displays “2-14”). This will be changed in the next update.

NY ET-706

• Taxable Gifts made within three years of death: the NY tax attributable to these gifts may not be included in the state death tax deduction that appears on Line 3b of the 706 (because these gifts are not included in the federal gross estate). This calculation has been modified accordingly. Note the amount that appears on the lower right panel of Page 1 of the NY ET-706 (“NY Tax w/o Taxable Gifts”).
• Schedule E, Columns B & C: these columns were being used in the calculations, but were not printing. This issue has been resolved.

03/03/2016

Form 8971: Summary of Proposed Regulations (published at 4:15 pm on 3/2/2016)

8971 Summary

8971 Proposed Regulations

A quick review of the proposed regulations yields the following new or clarifying information:

1) Information Return:  Form 8971

2) Statement:  Schedule A of Form 8971

3) Portability.  Form 8971 does not apply to portability-only 706 returns

4) Property Not Reportable.  The following property is exempt from the reporting requirements:

    (a) cash (other than coins or paper bills with numismatic value)

    (b) income in respect of a decedent

    (c) tangible personal property for which an appraisal is not required under 20.2031-6(b) (i.e., less than $3,000)

    (d) property that is sold or otherwise disposed of by the estate (and therefore not distributed to a beneficiary) in a transaction in which capital gain or loss is recognized.

5) Property Reportable.  Includes property the basis of which is determined in whole or in part by reference to the basis of the property acquired from the estate or as a result of the death of the decedent.  This includes property that results from a like-kind exchange or involuntary conversion.

6) Recipients Not Yet Determined.  If, by the due date of the 8971, it is not certain which beneficiaries will receive what property, Schedule A for each beneficiary must list all property that *could* be use to satisfy that beneficiary’s interest.  This will result in the duplicative reporting of these assets on multiple Schedules A.  When actual distributions are made, the executor may (but is not required to) file and furnish a supplemental 8971 and Schedule A.

7) Subsequent Transfers.  If all or any portion of property reported/reportable on Form 8971 and Schedule A is distributed (by gift of otherwise) by the recipient in a transaction in which a *related* transferee determines its basis, in whole or in part, by reference to the recipient/transferor’s baas, the recipient/transferor must file a Schedule A with the IRS and furnish a copy to the transferee. If such a transfer occurs before a final value is determined for the property, then the transferor must provide a copy of Schedule A to the Executor, who in turn must provide a supplemental Schedule A to the transferee instead of to the transferor.  [It’s not clear whether this “daisy-chaining” requirement applies to a transferee who, in turn, distributes this property to another *related* transferee, etc., ad infinitum].

8) Beneficiary Cannot Be Located.  The executor must report this fact on the 8971, and explain the efforts to locate the beneficiary.

9) Basis Adjustments.  This information (based on change in final value, new information, or the filing of a supplemental 706) “must be shown separately from the final value required to be reported on the beneficiary’s Schedule A.”  [Presumably, this information can be included in the description of the property reported on Schedule A].

10) Post-death Basis Adjustments.  The general rule is that a basis exceeding the final value for Federal estate tax purposes constitutes an impermissible “inconsistent basis”.  The proposed regulations clarify that this rule does not prohibit adjustments to the basis of property as a result of post-death events that are allowed under other sections of the Code.  The proposed regulations require only that the beneficiary’s *initial* basis of the inherited property may not exceed the initial value of the property for Federal estate tax purposes. Post-death events (such as depreciation or amortization, or a sale, exchange, or disposition of the property) will not cause the taxpayer’s basis in the property (on the date of a later taxable event) to be treated as exceeding the final value of the property. [Although not explicitly stated in the proposed regulations, it would appear that such post-death basis adjustments would include an election by the estate under IRC 643(e)(3) to recognize gain or loss on all distributions of property to beneficiaries during a given fiduciary income tax year].

There are additional scenarios, and a number of useful examples, contained in the proposed regulations, so you will want to review all 45 pages carefully.

Also, we can expect some “shakeout” once these proposed regulations are digested by practitioners during the next 29 days and beyond!

02/22/2016

Below is a sample report that we built into 6-in-1 this past weekend, to help you reconcile your 8971s against your 706s.  Please send us any thoughts on changes that you might suggest.

Sample 8971 Report

We are expecting proposed regulations for the 8971 any day now, and will be posting another update to incorporate any relevant further guidance that these regulations may contain.

02/19/2016

Version 2016-049 includes updates to the items listed below. If necessary, refresh or reload your browser window so that you get this latest release (not 008, 028, 035, 046, 047, or 048).

Zoom: It appears that many users are not aware that they can control the 6-in-1 “zoom” level (up to 400%). By default, 6-in-1 ships with a zoom level of 150%.   On monitors with high resolution, this level can cause 6-in-1 to display at a small size. To set the zoom to a comfortable level after any upgrade, take the following simple steps:

• At the 6-in-1 Main Menu, click on the “Zoom” button in the upper left corner.
• In the top/center of the screen, choose an appropriate zoom level. You can experiment with various zoom levels by clicking on the “mountain” icons in the lower left corner of your screen, to the immediate left of the word “Browse”.

e-file:

1) 2014 and 2015 returns. These returns for the same estate or trust are now clearly separated. Click on the 2014 or 2015 button at the top of the screen to display returns for each year.

2) 2014 with new schema 2014v5. As reported in our 1/28/2016 notes, the IRS requires this new schema for all 2014 returns filed on or after 1/9/2016. Thus, be sure that you are running 2016 software when e-filing 2014 returns.

3) Form 8879-F fiduciary signature date. Be sure to enter a 2016 date. Returns e-filed in 2016 must bear a signature date that matches the year of filing.

PA-1500: New dates on Page 1 and various schedules. These pages were not changed, but the PA Department of Revenue chose to assign new dates in connection with updates made to some of the instructions.

PA-41, Schedule B, Line 12: Under some circumstances, this total was double counting Line 7. This was related to a change in which the 2014 Line 7 was split into 2015 Lines 7 and 8. This issue has been resolved and backwards compatibility with 2014 returns has been preserved.

IN IT-41, Schedule IN K-1.  This schedule is new for 2015.  Because Indiana announced back in August 2015 that it would not be accepting IT-41 returns for testing until 1/26/2016, we moved the existing IT-41 (unchanged from 2014) and the new Schedule IN K-1 to the “back burner”.  With the release of 6-in-1 2016-049, we will now turn back to that form for submission, approval, and inclusion in the next update.

Estate Tax Returns (calculations through 2015) (6-in-1 and DecoupleCruncher):

DE 900-R
MD MET-1
MN M706
RI-100A

Form 8971: This software has gone through several iterations in the hands of users who installed the “early-bird” release (2016-008) or any of the interim releases (2016-035, 2016-046, 2016-047, or 2016-048).  We thank those users who installed any of these versions and gave us feedback on the new Form 8971.

The IRS announced in Notice 2016-19 (2/11/2016) that it was extending the deadline for filing Form 8971 (for 706 returns filed on or after 8/1/2015) from 2/29/2016 to 3/31/2016.   Bob Wolf, attorney at Tener, Van Kirk, Wolf & Moore in Pittsburgh, calls this a “stay of execution”.

This extension provides the IRS with more time to release proposed regulations that should provide guidance to supplement what is contained in the form and instructions themselves.

Note the following software enhancements/corrections to Form 8971 and Schedule A:

• The appropriate Executor TIN will appear in block 6, depending on whether you specify that the executor is an Individual or a Firm/Bank.
• The alternate valuation date will appear on Line 9 only if alternate valuation is elected.
• The 706 item numbers will now carry forward from upgrade to upgrade. This was not necessary before because they were automatically generated during preview and print. Also, you can refresh all such item numbers for display on Schedule A by clicking on the button on the right side of Form 8971.
• Schedule A will display a Y or N in Column C (“Did this asset increase estate tax liability?”) according to the following rules:
  1. Zero-tax 706: “N” for all assets
  2. Taxable 706: “Y” for all assets, except those for which a marital or charitable deduction is claimed.
• Schedule A description for beneficiary interests of less than 100%. The language “Beneficiary Interest: nn%” will now appear automatically at the end of the description for each such asset reported on Schedule A.
• Beny allocation overrides (on “Allocations” screen in Transact, right side):
  1. An asset can require a “Y” for a portion (i.e., credit shelter trust) and an “N” for a portion (i.e., marital trust). Select “Y” for the credit shelter portion as an override on the right side.
  2. Alternate valuation: a single asset can theoretically be distributed to various beneficiaries on various dates and at various values within the six-month alternate valuation period. Enter Date and Basis overrides for each beneficiary on the right side.
  3. 643(e)(3) election: if the estate makes this election on the 1041, then the value to be reported Schedule A will not be available on the 706, because the value at the time of distribution will serve as the new basis (in lieu of the date-of-death value or the alternate valuation value). Enter this new basis in the Basis Overrides fields on the right side.
• Schedule A Description Override. Many 706 descriptions will contain language (such as “See attached appraisal”) that is unnecessary or inappropriate for the 8971. On the 706 screen in Transact, and description that you enter into the 8971 “Schedule A Override” field (scroll down) will be used in place of the 706 description. Rather than retype the relevant part of the 706 description, just click on the “Set to 706 Description” button (left side), then delete the language that you do not want.
• Supplemental 8971. Because of the ongoing duty to report changes to information contained on prior 8971s, you must track which assets have changes. Do this by checking the “Changed” box (above the Beneficiaries field on the main Transact screen), then entering new information in the 8971 Schedule A Override field. When you check the “supplemental filing” box in the upper left of Form 8971, the form will display only those beneficiaries who have received one asset with changes, and Schedule A will list only those assets with changes.
• EVP valuations. Some users have prepared Form 706 by attaching an EVP report to Schedule B, etc. This approach may not be sufficient for Form 8971 purposes. If you can get the *.evp file from the broker who provided you with that report, then you can import that data into 6-in-1. You will now have the asset details available for automatic use on Form 8971.
• Assets assign to more than 10 beneficiaries. Follow the same procedure as before in the Allocations screen. If necessary, consult the help screen by clicking on the question mark in the lower left of the Allocations screen, to the left of the “A” on the “A B   C” line.

It is still not known whether Form 8971 applies in the following scenarios or to the following property types:

• Portability-only 706s? A literal reading of the statutes and regulations could lead to this conclusion, but we think that the IRS will clarify that Form 8971 does not apply. The Office of Assistant Chief Counsel, Department of the Treasury, told us the following in a phone call on 2/9/2016:  “For 706s filed solely for portability reasons, practitioners should spend NO TIME OR EFFORT on preparing Form 8971 or Schedule A until the IRS releases further guidance, even if that guidance is not released until 2/29/2016.”

• Cash assets? Currently, any asset listed on the 706 and showing a Bank Deposit name will automatically be marked “Cash” (checkbox above Beneficiaries field in Transact). For non-probate assets that are also cash, you should check this box. By default, 6-in-1 will not include cash on Schedule A of Form 8971 (pending IRS release of proposed regulations). If you want to report them, just check the box in the upper right of Form 8971.
• IRD? By default, 6-in-1 will not include IRD on Schedule A of Form 8971 (pending IRS release of proposed regulations). If you want to report, just check the box in the upper right of Form 8971.
• Assets sold by the estate?
• Section 643(e)(3) election? Asset distributed to beneficiaries, but deemed to be sold by the estate under a Section 643(e)(3) election.

Headers: You may wish to have the display on Schedule A of Form 8971 mirror the display on Form 706. We have made sure that the sort sequence on both forms is identical. To include headers on Schedule A of Form 8971, check the box in the upper right of Form 8971.

Future updates to Form 8971:

• Residue exhausted. This issue came up yesterday, and is a bit of an outlier. Twelve (12) beneficiaries received varying percentages of the residue. For all but three, however, the federal estate tax consumed their entire shares. We have modified the logic in the master copy of 6-in-1 to test for the post-tax distributed to each beneficiary.
• Section 645 elections. If your 706 is generated from an estate and one or more trusts, we need to generate Form 8971 in the same way. Please contact us if you have that scenario. The next upgrade will incorporate this feature.

As you can see, there seems to be no end to the variations that new Form 8971 presents. We will be releasing further versions of the software based on proposed regulations expected imminently from the IRS, as well as on continued user experience working with the software and ongoing discussions occurring in various forums including the ABA Estate Planner’s and Administrator’s list.

01/28/2016

Version 2016-027 includes the items listed below.  There will be at least one more update this tax season while we wait for IN IT-41 approval and release of the final US 8971 form and instructions (the “basis consistency” form).

As always, please contact technical support if you find anything in the software that requires our attention.

Approved fiduciary income tax e-file (including dates of approval):

1041* 01/12/2016
NJ      12/15/2016
NY      01/19/2016
OH     01/26/2016
PA      01/21/2016

Approved paper filing:

8971: New “basis consistency” form, posted as a second draft on 1/26/2016**.
709
1041

State Fiduciary Income Tax:  CT, DE, IL, MA, NC, NJ, NY***, OH****, PA, VA, WI

NY ET-706 (for decedents dying on/after 4/1/2015)

MD MET-1 (2015)

*     1041:  Returns e-filed between 12/28/2015 and 1/8/2016 were not processed right away by the IRS, which disabled e-filing while it prepared its systems  for the new tax year.  When it did process them on 1/8/2015, it rejected them all for one of the following reasons:

2014:  As of 1/8/2016, these returns needed “XML schema” v5.0.

2015:  Short-year 2015 returns now need to use the 2015 schema rather than the 2014 schema.

With the 2016-027 update, you should resubmit all of these returns through e-file.  The software will automatically use the schema appropriate for the tax year.

Note:  you must change the “Signature Date:  Fid” (upper right of e-file Center) to a 2016 date.  We don’t believe that this requires another Form 8879-F to be signed by the fiduciary.  The “Signature Date:   ERO” doesn’t matter.  No harm in changing it as well.

** 8971:  This new form (not yet released in final) will be required for all estates where 706 Line 1 plus Line 4 exceeds the basic  exclusion amount ($5.43m in 2014, $5.45m in 2015) for returns filed on/after 8/1/2015.   This form is normally due within 30 days after the date that the 706 is filed, and a Schedule A also has to be provided to each beneficiary within the same time period for property acquired from the estate.  The reporting requirement does not apply to cash or IRD (which could be cash or non-cash).

For returns already filed on/after 8/1/2015, this date has been extended to 2/29/2016.

6-in-1 will automatically generate this form based on existing  data, with one exception.  Currently, 6-in-1 calls for the allocation of pre-residuary transfers (bequests, joint property, and transfers) to beneficiaries, in order populate the beneficiary “grid”.

The extra step that you must now take is to allocate residuary property that is being distributed to beneficiaries.   You will do this in the same way as you do with pre-residuary property.  The extra step involves checking a box entitled “Beny Residue” that appears above the right side of the Beneficiary(ies) field on the main Transact screen.  You must then refresh the allocations by navigating to the Beny Allocations screen (via the yellow button directly above the Beneficiary(ies) field in the main Transact screen, then click on the red “Refresh Beny Share of Assets” button on the right panel.

Also be sure to consult the help screen to the left of that checkbox.  There is a special procedure for Supplemental Filings of Form 8971, wherein you are asked to report only information that has changed.

We are still waiting for the final Form 8971 and draft or final instructions.  Unofficial draft instructions dated 11/20/2015 were found recently by a practitioner at the following link:

www.reginfo.gov/public/do/DownloadDocument?objectID=60262200

Vince Lackner recently recorded a Podcast with Bob Keebler on the 8971, and this should be available on the Leimberg Services website in the near future.  Also, he is writing an article for the Leimberg Newsletter that will be published once the form and instructions are released in final form.

If no changes are made from second draft to final 8971, we will provide you with a code that removes the watermark.

*** NY IT-205:  Note the somewhat bizarre calculation at the $500K taxable income level.  The first dollar over $500K generates a tax of $133, a marginal rate of $13,300%!  We have confirmed this with the NY Department.

****  OH IT-1041:  We are waiting for test results on the 11 test scenarios that we submitted.  If no changes are required to the version contained in update 2016-027, we will provide you with a code that removes the watermark.

IN IT-41:  IN announced last summer that it would not start testing IN fiduciary income tax returns until 01/26/2016.  We will be submitting our four pages of test returns (two pages for the IT-41 itself, and two pages for the new IT-41 K-1) next week.

[/vc_column_text][/vc_tta_section][vc_tta_section title=”2015 Release Notes” tab_id=”2015-Release-Notes”][vc_column_text]

08/29/2015 (10:20 am)

Standalone and Server versions uploaded again to website (yesterday’s upload apparently was only 67% complete).

08/28/2015 (10:00 am):

e-file Status Report #2014-25

Version 2015-240 just posted. If you still need to e-file any returns by the 9/15/2015 extension date, we encourage you to download this version.

To date, 60 firms have e-filed 1,442 returns, as follows:

US: 1,020
NJ: 30
NY: 45
PA: 347

The SDK/Software Developers’ Kit error (based on an issue known to the IRS since March but only recently communicated to us) was resolved by SDK v5.3 that we received last week from the IRS. We incorporated this version into the software several days later. All 22 such returns have now been resubmitted by the affected firms and have been accepted by the IRS.

The only known remaining issues are the following:

1) 10 returns were marked as “Duplicate” when, in fact, the first submission was accepted by the IRS. Yesterday, the IRS sent us the Submission IDs for the accepted returns. We will work early next week with the affected firms (via GoToMeeting) to set the status to “Accepted” in the 6-in-1 software.

2) One NY IT-205 has a value on Page 1, Line 34, that requires an attached “Wage and Tax Statement”. We will be addressing that issue within the next several days.

There are still occasional odd data conditions that arise, and we deal with them on a case-by-case basis. As always, we look forward to ensuring that you get all of your extended 2014 returns e-filed and accepted by the 9/15/2015 due date.

03/05/2015 (9:00 am):

You can view a copy of the entire set of 2015 Release Notes by clicking on the pdf file listed above:Release_Notes_2015_063.pdf

Comic Relief
www.ShipSnowYo.com: can place order for Boston snow to be shipped overnight to anywhere in the country (6 lbs or 22 lbs). This website will add add a little levity to your intense tax work this time of year.

e-file
You can now validate your returns just as you did last year, but not yet e-file them. Now that we have completed our exhaustive review and analysis of the PA-41, with its more-than-complicated instructions for Schedules A and B, we will be focusing almost exclusively on completing e-file testing (1041, NJ, NY, and PA). Most preparers are providing beneficiaries with their K-1s, but holding their returns until e-file becomes available.

We have continued our discussions with the IRS (initiated on 2/3/2015) about the “stockpiling” rule, and expect to hear further on Friday 3/6 or Monday 3/9. Once the IRS figures out what department is responsible for addressing this issue, it may become moot, e-filers will e-file, spring will arrive, and 2015 returns will be upon us before we know it!

PA-41
1) Please see the PA-41 Chart (pdf file listed above). This is one of the best ways to understand fully the flow of income to the 1041, and via the 1041 to the PA-41 (with additions, reductions, and moves to other schedules).

2) Please see the PA-41 Comments (pdf file listed above). See in particular discussion of $250 penalties for various failures to file (PA-41) or provide/attach (RK-1s, NRK-1s).

Changes from 2015-048 to 2015-063:

709
Page 4, Details button: now correctly navigates to 2014 version of the Details screen, then back to the 2014 version of Page 4.

PA-41
Pre-2014 returns: corrected some issues relating to statements and subtotals for interest and dividends, by restoring old behavior (pre-2014) while preserving new behavior (for 2014 and later).

Schedule B: the Line 5 total now includes the U.S. Obligation portion of Line 4.

Print Options: now include a statement for Schedule B, Line 7, when it includes two types of income (i.e., PA and non-PA Obligations). Also display “See attached statement” in the Description field on Line 7 in this scenario.

View: now includes above statement for Schedule B, Line 7.

Schedules A and B: for transactions that are partially taxable (non-PA Obligations) and partially exempt (PA Obligations), now include the exempt portion on both the addition and the reduction lines (so that this income is a wash).

Help screens: expanded help text in various help screens. Be sure to click on nearby help buttons if you have questions on various aspects of the program.

RK-1/NRK-1: note the sections on “Foreign Address Standards” (page 1 of the RK-1 and NRK-1 instructions).

Capital Gains Distributions/Short-Term: Code 18.97 now behaves just like 26.15, by suppressing amount from PA-41, Schedule B, Line 8 (because now included on Schedule B, Line 1, which comes from the 1041, Line 2).

1041
Schedule I, Line 72, text label: now prints on the non-blank version of Schedule I, Page 3 (was inadvertently set to “Do not print”).

Schedule D, Page 2 (non-blank version), Part V, Lines 28 and 33, text labels: now correctly display $2,500 and $12,150 (rather than $2,450 and $11,950). This was only a text display issue. Calculations were not affected.

Numbers screen: Line 24e now gets cleared if you recalc with “Clear overrides” box checked.

Penalties
$100 for each incorrect/missing K-1 or beneficiary TIN
$250 for each reporting requirement intentionally disregarded
$1.5m maximum per calendar year

Codes and Categories

We have added several codes and categories to handle the new distinctions required by Schedules A and B of the PA-41:

Codes:
1) Interest: 18.84, 18.85, 18.86, 18.91, 18.92, 18.93, 18.94
2) Dividends: 19.84, 19.85, 19.86, 19.87

Categories:
1) Income: Dividend K-1…
2) Income: Interest K-1…
3) Income: Exempt Dividends… Descriptions modified to refer to three types of Obligations for state income tax purposes: U.S. (exempt), THIS State (exempt), and State/Local (fully or partially taxable)
4) Income: Exempt Dividends… Same as above
5) Dividend Reinvestments: Taxable FED and STATE, Exempt FED and STATE, Exempt FED/Taxable STATE

Transact
2013 Capital Gains/Losses: restored checkboxes A-F for Form 8949 classification purposes (logical inadvertently suppressed this section for 2013 transactions).

PAF Screen: added “Exempt” amount field, and moved “% Exempt” field to the immediate right of the “Exempt” field. “% Exempt” field displays only for transactions that could be fully/partially taxable for PA purposes.

PAF Screen: in the upper left, added a copy of the Amount field from the Main screen. This can be helpful when the amount is split between Taxable and Exempt. A future version will read “Gross Amount” at the top.

Beny Allocations: clearing beneficiary information (with “<=Clear=>” button) will now remove the red block that signified a mismatch between a beneficiary previously selected in Transact and a newer version of that beneficiary record now used in the Beneficiaries file.

PA-41 Adjustments: green button on main Transact screen also available on PAF screen in Transact. Clicking on Transact/Advanced will now take you back to the main or PAF screen (from which you chose PA-41 Adjustments).

PAF Screen: can now navigate directly to PA-41, Schedule A or B (buttons at top).

Beneficiaries
Grid: cash bequests made to a surviving spouse now properly appear in the 0% column on the PA-1500 Tax Allocation screen. This is an uncommon scenario, but happened to emerge within the past two weeks.
Grid: arrows at top of pre-residue columns (click to display asset allocation reports) now default to sorting by beneficiary (within schedule).
Grid: above state-level asset allocation reports again display the state inheritance values for all transactions.

CT-706 NT
Page 2, Part 3: now correctly displays amount in Column C for life insurance on the life of the decedent.

M-706 (MA Estate Tax)
Page 1: Added field for Executor’s telephone number.
Page 2: Added lines to Part IV for penalty, interest, and tax payments (in addition to payments made with extension).

NJ Inheritance/Estate Tax
Schedule “B_00” (Closely Held Businesses) now mapped to Schedule E-6 of the NJ Estate Tax Return.

NJ Inheritance Tax
Schedule E (Beneficiaries): Total of rightmost column (Interest of Beneficiary in Estate) now displays total of all beneficiaries, not just the amount assigned to the last beneficiary on the schedule.

NJ-1041
Address now correctly displays attorney address when you toggle from Executor to Attorney.

NY IT-205
Tax paid with voucher (NY): confirmed advice received from the NY Department of Taxation two years ago (report this tax on Line 30, Estimated Tax Paid).
Tax paid with voucher (US): for consistency, could report this on Line 24a, Estimated Tax Paid. Raised this with the IRS, but did not get a definitive answer.

Accounting (PA)
Proposed Distributions: language at bottom (“balances subject to increase/decrease…”) now optional. Will display only if you check box on the right panel of the Print Options screen.

02/17/2015 (6:00 pm):

6-in-1 update 2015-048 is available for immediate download. It is a cumulative upgrade. If you downloaded 2015-044 (Friday, 2/13/2015, not announced), 2015-048 will serve as a “minor” update (no Transact file, and therefore must faster to complete).

Alternate download link:

6-in-1 Downloads Page

02/13/2015 (6:05 pm):

6-in-1 update 2015-044 is available for immediate download.

02/04/2015 (11:35 pm):

6-in-1 update 2015-035 is available for immediate download:

Standalone: 2015-035-v10 (note: there is no “035a” for the standalone version)

Server: 2015-035a-v10-server

It includes the following:

709: Pages 1-5 and related worksheets

1041: Pages 1-2, C, D, E, ES, F, I, J, K-1, V, 1116, 2848, 4562, 4797, 5227, 6252, 8582, 8821, 8879-F, 8949, and 8960

State Fiduciary Income Tax: CT, DE, IL, IN, MA, NC, NJ, NY, OH, PA, VA, WI

PA-1500:
Revised versions of Pages 1-2 released on 12/17/2014. Existing form still acceptable at Registers of Wills throughout Pennsylvania. Both 6-in-1 and I-Tax versions have passed testing with the PA Department of Revenue.

Includes the 2015 interest rate (.000082 daily, or 3% annual), plus slots for interest rates through the year 2020.

New Schedules AU (Agricultural Use Exemption) and C-SB (Small Business Exemption) are also included.

NY ET-706: New versions for decedents dying between (1) 1/1/2014 and 3/31/2014 and (2) 4/1/2014 and 3/31/2015. The latter has a rather complicated “cliff” or “notch” calculation that has been incorporated in the software.

Notes:

Full approvals received for nine of the 12 states, including four that came in on Thursday, 1/29/2015

IL: approval pending on the IL-1041 K-1-T
IN: approval pending on Pages 1-2 (the Department is waiting for an update to its machine-testing software)
OH: approval pending on Pages 1-5 (the Department released its final nine vendor samples for testing on 1/12/2015)

In each case above, if there are no changes required to the versions as they initially ship, we will provide you with codes for IL, IN, and OH to remove the “Do Not File” watermarks.

Modernized e-file (“MeF”): our team has been working on this for several months. We will be supporting MeF 1041, NJ, NY, and PA. As we wrote in previous e-mails, all three states will “piggyback” on the 1041 filing. In other words, when you e-file your 1041, you will need to e-file your corresponding state return at the same time. Both returns will go to the IRS, which will validate the state return before handing it off to the state. Any acceptance or rejection results will then come directly from the state. If, for some reason, you will not need to e-file a state return, we will provide a checkbox to allow the 1041 e-filing without the corresponding state e-filing.

We will keep you posted as we move through the testing process with the IRS and the three states.[/vc_column_text][/vc_tta_section][vc_tta_section title=”2014 Release Notes” tab_id=”2014-Release-Notes”][vc_column_text]

10/20/2014

e-file statistics

1041
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).

PA-41
Accepted: 733 (63 firms)
Rejected: 4

08/22/2014 (6:30 pm):

Version 2014-234 now available for download.

Primary additions:

1) CT-706/709 and CT-706 NT (and related extensions forms) for 2014

2) New “Out-of-Balance” reports: access from green “OOB” button at the top of the main Transact screen, or the larger green button toward the bottom right of the screen. These screens should allow you to pinpoint potential out-of-balance transactions (or transactions missing bank names) almost instantly.

Click on a line in the report (to highlight in yellow), then click on Sched in left column (with gray shading) to navigate to details for that transaction.

Also, click on Prev/Next buttons (or press Ctrl-Up or Ctrl-Down) to navigate to other records in that found set.

07/07/2014

e-file statistics

1041
Accepted: 1,799 (116 firms)
Rejected: 31 (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).

PA-41
Accepted: 719 (63 firms)
Rejected: 4

02/27/2014 (12:25 am):

Version 2014-058 is now available for immediate download. Please refer to e-mail for details.

02/26/2014 (8:15 am):

Version 2014-057 is now available for immediate download.

02/25/2014 (5:00 pm):

Version 2014-056 is now available for immediate download. It resolves the several issues on Schedule D and Form 8949 (new this year for estates and trusts) that were reported during the past 48 hours.

It also restores continuation Schedule D-1 for capital gains being shown (as aggregate numbers) on Lines 1a and 8a of Schedule D. Although the IRS announced that Schedule D-1 will no longer be used in 2013 and later, that schedule is still useful (as an observant user pointed out) as a non-filing report that can be used to reconcile against the original data.

Also, we received permission yesterday to share an outstanding article by John Goldsbury of U.S. Trust entitled “Dealing with the 23.8% tax on trust capital gains: 21 ways (and counting) to have a trust’s capital gain taxed to the beneficiary”. This could be helpful as you consider making distributions on or before 3/6/2014 in order to shift capital gains from the fiduciary’s 23.8% maximum rate to lower rates on beneficiary K-1s for 2013 purposes. You may download this article from the above list of download files, right below “Visual Tax Table”.

02/22/2014 (12:30 pm):

The 2013 fiduciary income tax update (1041 plus 12 states) is now available for immediate download.[/vc_column_text][/vc_tta_section][/vc_tta_accordion][/vc_column][vc_column width=”1/3″][vc_column_text el_class=”marginL20″]

Download Current Version:
2023-024 (1/24/2023)

NOTE:  You will be forwarded to our new download page

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