10622: 5227 - Split-Interest Trusts

According to Form 1041-A instructions, page 3:

"Split-interest trusts as described in section 4947(a)(2) don’t file Form 1041-A. These types of trusts file Form 5227, Split-Interest Trust Information Return, which meets the section 6034 filing requirements."

Form 5227 instructions state that the following types of organizations should use Form 5227: 

"All charitable remainder trusts described in section 664 must file Form 5227. All pooled income funds described in section 642(c)(5) and all other trusts such as charitable lead trusts that meet the definition of a split-interest trust under section 4947(a)(2) must file Form 5227 unless the Exception [listed on page 1 of Form 5227 instructions] applies."

Per final regulations (T.D. 9972) issued in February 2023, filers are required to file Form 5227 electronically if they file 10 or more returns in the aggregate in a calendar year. The regulations are effective for returns required to be filed for tax years ending on or after December 31, 2023. A filer required to file at least 10 returns of any type during the calendar year ending with or within the tax year must file their returns electronically. “Returns” for purposes of these instructions include information returns (for example, Forms W-2 and Forms 1099), income tax returns, employment tax returns (including quarterly Forms 941, Employer's Quarterly Federal Tax Return), and excise tax returns. The failure to file a return electronically when required is deemed a failure to file the return even if the filer submits a paper return.

To prepare Form 5227 for 1041 returns, complete all applicable screens on the 5227 tab of the Data Entry Menu. e-File development for Form 5227 is currently underway, and e-file will be activated for Form 5227 in Drake23 at a later time. If the preparer is not subject to the Form 5227 EF mandate, they can print Form 5227 and paper file it as directed on page 3 of the instructions for Form 5227. A calendar-year Form 5227 is due by April 15, 20YY. A short-year final return is due by the 15th day of the 4th month following the termination.

e-File for Form 8868 is available starting with Drake23. Complete Form 8868 using screen 8868, available on the 5227 tab of the Data Entry Menu. Be sure to indicate that the application is for Form 5227; doing so produces a Return Code of "10" on Form 8868. See the Form 8868 instructions for additional details.