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Electing Small Business Trust (ESBT) and S Corp portion for Fiduciary

SOLVEDby IntuitLacerte Tax15Updated September 27, 2021

If the trust has income from S Corporate stock and no other income:

  1. Go to Screen 1, Client Information.
  2. Scroll down to the Miscellaneous Info section.
  3. Select ESBT (SCorp portion only) from the Type of Entity drop down menu.
  4. Go to the various input screens and enter the ESBT income.

All items entered will be treated as ESBT income and taxed at the ESBT tax rate.

If the trust has both S Corporate stock income and other income two returns will need to be created (one to calculate the ESBT portion and one for the other income):

  1. In Screen 1, Client Information, scroll down to the Miscellaneous Info section.
  2. Select ESBT (SCorp portion only) from the Type of Entity drop down menu.
  3. Go to the various input screens and enter the ESBT income.

Once the ESBT return is complete:

  1. View Form 1041 on the Forms tab and make note of the Total Tax on line 23.
  2. Next, select Worksheets and go to the Tax Calculation for Electing Small Business Trust (ESBT) worksheet.
  3. Print the Worksheet to PDF (if e-filing) or Printer (if paper filing).

Once the Worksheet is printed and the amount of tax notated, you will need to enter the total tax in the Complex Return for the Non-ESBT return:

  1. On the Non-ESBT Return, go to Screen 42, Other Taxes.
  2. Scroll down to the Total Tax section and enter the total tax notated above, in ESBT tax [A].
  3. Hold down Ctrl+E in Tax computation for ESBT tax (Ctrl+E) and enter the tax computation.

The Tax Amount will print on Form 1041, Page 2, Schedule G, Line 7 along with the text, Sec 641(c). The tax on the remainder (non S-Corporation) of the ESBT is computed as normal on Form 1041.

The ESBT Worksheet should be attached to the non-ESBT return if paper filing or e-filing.

To e-file the ESBT return with S Corporate income and other income:

  1. On Screen 1, Client Information, Check the Federal box under the Electronic Return section.
  2. Attach the Tax Calculation for ESBT worksheet as a PDF.
  3. Under the E-file menu, select Step 2: Start e-file Return Wizard.
  4. Continue through the E-file Wizard to e-file the return.

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