The IRS has released a draft of the 2007 Form 5227, Split-Interest Trust Information Return, required for chariable remainder trusts and charitable lead trusts. The draft form incorporates information formerly reflected in the Form 1041-A; however, it is not yet known if Form 1041-A will be still be required for 2007. A release date for the final form and instructions is targeted for December 24, 2007. Comments should be submitted to the IRS by December 14 to allow proper consideration.
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The IRS has posted a draft of the 2007 Form 5227, Split-Interest Trust Information Return, on its website. The draft form is available at: http://www.irs.gov/taxpros/lists/0,,id=97782,00.html. Instructions have not yet been provided.
Significantly, the Form has grown from 4 to 7 pages. The Form incorporates information formerly reflected in the Form 1041-A. The Form now includes (1) an "Open to Public Inspection" notice on page 1; (2) schedules for distributions of principal for charitable purposes and accumulated income set aside and income distributions for charitable purposes on page 2; and (3) the accumulation schedule, and current distribution schedule have been moved to page 7 which contains a "Not Open to Public Inspection" notice. Confirmation from the IRS is being sought that the Form 1041-A will not be required for 2007.
A new schedule requesting information about donors and assets donated is included on page 7.
A release date for the final form and instructions is targeted for December 24, 2007. Comments on the draft form should be submitted to the IRS within 30 days after the posting date to allow proper consideration.
Depending on the date of the IRS's final approval of the form, software vendors may be delayed in releasing tax preparation software. As such, trustees might want to notify income beneficiaries of possibly receiving their Schedule K-1, which reports relevant tax information, later than usual.
Special thanks to William H. Hranchak of Temo A. Arjani & Co., LLP for this story. Mr. Hranchak can be reached at bhranchak@arjani.com.