March 15th in each year or on or before the fifteenth day of the third month following the close of the fiscal year of the estate or trust accordingly as it reports upon the basis of the calendar or a fiscal year. 68

EXTENSION OF TIME. The same extension of time may be granted for filing the returns of fiduciaries as may be granted to individuals.

PREPARATION OF ANNUAL RETURN. The annual return of a trust estate is prepared in the manner indicated on the form supplied by the Government. No special rules are applicable to fiduciaries, except that in the case of income which is to be distributed to the beneficiaries periodically, whether or not at regular intervals, and in the case of income collected by a guardian of an infant to be held or distributed as the court may direct, the fiduciary is required to include in his return a statement of each beneficiary's distributive share of the net income of the estate or trust, whether or not distributed before the close of the taxable year for which the return is made.69

HOW SIGNED AND SWORN TO. The law provides that the fiduciary shall make oath that he has sufficient knowledge of the affairs of the individual, trust, or estate for which he acts, to enable him to make the return and that the same is, to the best of his knowledge and belief, true and correct.70 When the return is signed and sworn to by an individual as a fiduciary his full address was required to be stated, under the 1916 Law. If the fiduciary was an organization, the return was signed and sworn to by the president, secretary or treasurer.71

Returns for Beneficiaries. As a general rule the fidu

68 See Chapter 34 on Returns. The annual return under the 1916 Law was required to be filed in all cases on or before March 1st of the year following that for which the income was reported. Although a fiduciary might be a corporation, no privilege was extended for the filing of the return for any other period than the calendar year.

69 Revenue Act of 1918, § 219 (b).

70 Revenue Act of 1918, § 225.

71 Reg. 33, Art. 73.

ciary is not required to make any return of distributed income as the term is defined in a previous paragraph for and on behalf of his beneficiary.72 If, however, the fiduciary has been legally authorized to act as agent for the beneficiary, or as attorney-in-fact, he may also make and file the personal return of the beneficiary in the same manner as any other duly authorized agent may do.73 If the beneficiary is unable to make his own return, or is a non-resident alien, the fiduciary is required to make the personal return for him, as indicated in the following paragraphs.

FOR MINORS OR INSANE PERSONS. Under the 1916 Law where the fiduciary acted for a single beneficiary who was a minor or an insane person, he was not required to file a fiduciary return for the trust estate (Form 1041) but could make a personal return for his ward on the form prescribed for individuals (Form 1040). If, however, a fiduciary had more than one ward by reason of the same estate or trust, he made the fiduciary return, and also a separate return for each ward having a net income of $1,000, if unmarried or $2,000, if married.74 In all cases where fiduciaries acted for minors or incompetents they were held for the purpose of the income tax to be acting as the agents of such minors or incompetents and were required to pay all tax normal and additional chargeable on such income in their hands, as though the persons for whom they acted were acting for themselves.7 75 Under the present law it is ruled that a fiduciary acting as the guardian of a minor having a net income. of $1,000 or $2,000, according to the marital status of such person, must make a return for such minor and pay the tax, unless such minor himself makes a return or causes it

72 See page 127.

73 See Reg. 33, Art. 72.

74 T. D. 2090. In the year in which a minor became of age, the guardian made a fiduciary return under the 1916 Law for the period between the beginning of the year and the day on which the beneficiary became of legal age. At the close of the year the beneficiary made his own return including therein the amount of income received from the fiduciary during the year.

75 T. D. 2231,

to be made. A fiduciary acting as the committee of an insane person having an income of $1,000 or $2,000, according to the marital status of such person, must make a return for such incompetent and pay the tax. In either case, if the fiduciary is also acting for other beneficiaries, such a return shall be rendered in addition to the returns required for the trust estate.76

FOR NON-RESIDENT ALIEN BENEFICIARIES. When there is only one beneficiary, who is a non-resident alien, the fiduciary files only one return, that is, the personal annual return for and on behalf of the non-resident alien 77 signing the same as agent, reporting therein as income of the nonresident beneficiary the amount received by the estate or trust. If there are two or more beneficiaries, or if a part of the income accruing to the trust or estate is not distributed, the fiduciary is required to make a return as fiduciary and a separate personal return for each non-resident alien beneficiary.78 Under the 1916 Law the fiduciary was required to account for the normal and additional tax of non-resident alien beneficiaries in the same manner as any other agent for a non-resident alien was required to do.7

79

Income to Be Reported by Beneficiary. Unless the beneficiary is under some disability which requires a fiduciary to act, the beneficiary makes his own personal return and accounts for the tax upon his entire net income, including that which has been received from the estate. 80 The fiduciary is not under any duty to account for or pay the tax on amounts distributed to beneficiaries where the beneficiary is capable of making his own return and is not a non-resident alien. The beneficiary reports the income for

76 Reg. 45, Art. 422. Form Nos. 1040 (revised) or 1040-A (revised) are used for this purpose. 77 Reg. 45, Art. 425.

Form Nos. 1040 (revised) or 1040-A (revised) are used for this purpose.

78 Reg. 45, Art. 425; T. D. 2313. Form No. 1041 (revised) and Nos. 1040 or 1040-A are used for this purpose.

79 See Chapter 6 on Resident Agents for Non-Resident Aliens. 80 See T. D. 2090. See page 119.

the year in which it is received by him or credited to him. All amounts paid by fiduciaries to beneficiaries of trust estates from the income of such trust estates whether from reserves or otherwise, are held to be distributions of income and will be treated for income tax purposes in accordance with the provisions of law and regulations applicable to income of such beneficiaries. The beneficiary will be required in the case of trust estates to account for the actual amounts distributed or credited to him.81

Returns of Executors and Administrators. In addition to the duties which executors and administrators have in common with other fiduciaries, they are also required to report the income of the decedent for that part of the last taxable year during which he lived; and also for the preceding taxable year, if the decedent died before the time. for filing returns for such year had expired and no return had been filed by him. Thus, if a decedent died in February, 1919, without having made a return for 1918 the executor or administrator is required to file a return for 1918 and a return for the part of 1919 in which the decedent lived.82 If the net income of the decedent, from January 1 of the year in which he died to the date of his death, was less than the sum which would have made him liable to make a return if living, no return is required by the executor or administrator.83 The personal exemption which may be deducted from the decedent's income so reported is the full amount allowed to living persons of the same status as

81 Reg. 33 Rev., Art. 29. See Revenue Act of 1918, § 219.

82 Revenue Act of 1918, § 223. Returns seem to be required of executors or administrators in such cases on the theory that by reason of death the decedent is unable to make his own return, a return therefore being required by the "person charged with the care of the person or property of such taxpayer." See Brady v. Anderson, 240 Fed. 665, writ of certiorari denied 244 U. S. 654; Mandell v. Pierce, 3 Cliff. 134, 16 Fed. Cas. No. 9008; Reg. 33 Rev., Arts. 4 and 14. This subject is discussed more fully in Chapter 3 on Individuals to whom the Law is Applicable.

83 Revenue Act of 1918, § 223; Reg. 45, Art. 421. See also T. D. 2090 and Reg. 33, Art. 17.

that of the decedent at the time of his death, or at the end of the last taxable year he lived.84 Administrators or executors may, immediately after their discharge, upon final accounting, file with the proper collector of internal revenue a return of income for the income of the estate for the calendar year in which the administration was closed, and should pay the tax found by such return to be due imme. diately upon receipt of notice and demand for the amount of such tax. There should be attached to this return a copy of the certificate, under seal, setting forth the fact of final accounting and discharge of the executor or administrator.85

LIABILITY OF EXECUTORS FOR TAX. Liability for payment of the income tax attaches to the person of the executor or administrator for income tax, up to and including the date of his discharge, where prior to distribution and discharge he had notice of his obligations or failed to exercise due diligence in determining whether or not such obligations existed. Liability also follows the estate itself, and when, by reason of the distribution of the estate and the discharge of the executor or administrator, it appears that the collection of the tax cannot be made from the executor or administrator, the legatee or distributees must account for their proportionate share of the tax due and unpaid. The same rule applies to other trusts.86

Withholding at the Source Against Fiduciaries. The provisions with respect to withholding the tax at the source apply in the case of payments to fiduciaries in the same manner as in the case of payments to individuals. There is, generally speaking, no withholding at the source on pay. ments to citizens and residents of this country and, it follows that there is no withholding at the source in the case of a fiduciary who is a citizen or a resident, or has an office or place of business in this country. The one exception to this

84 Reg. 33 Rev., Art. 14. See Chapter 4 on Citizens and Residents of the United States.

85 Reg. 33 Rev., Art. 26.

86 Reg. 45, Art. 343; Reg. 33 Rev., Art. 29.

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