Release Notes for 6-in-1 Version 2020-052

6-in-1 Estate Administration Software, v2020-052, February 21, 2020

We’re delighted to announce second release of 6-in-1 Estate Administration Software for 2020.

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.