Rev. Rul. 82-177

ISSUE

Should a bank file Form 1041, U.S. Fiduciary Income Tax Return, for an estate under the circumstances described below?

FACTS

A caveat filed against a will resulted in litigation that lasted for over a year. As a result, no administrator was appointed by the court. Bank X held the estate's money and paid more than $600 in interest for calendar year 1981. The bank performed no administrative duties for the estate.

LAW AND ANALYSIS

Under section 6012 of the Internal Revenue Code, a return must be made by the fiduciary if an estate has gross income for the taxable year of $600 or more.

Section 7701(a)(6) of the Code defines a fiduciary as a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in a fiduciary capacity for any person. Under section 301.7701-6 of the Regulations on Procedure and Administration, a fiduciary is a person who holds in trust an estate to which another has the beneficial title or in which another has a beneficial interest, or receives and controls income of another.

Section 6020(b) of the Code authorizes the Secretary to make a return from information the Secretary may gather, if any person fails to make a return required by law.

Rev. Rul. 69-300, 1969-1 C.B. 167, holds that a bank is a fiduciary and is required to file Form 1041 when it is granted certain discretionary powers of administration and management. However, a bank or individual is not a receiver or fiduciary merely because it is appointed as a custodian.

Rev. Rul. 70-567, 1970-2 C.B. 133, holds that a bank is not required to file Form 1041 to report interest on funds it holds in escrow while the court determines the proper distribution when the bank is merely an escrowee and does not perform the ordinary duties of a trustee.

A bank may only file and sign Form 1041 if it is fulfilling the duties of an administrator for the estate. Such a determination depends upon the facts and circumstances in each case. If the bank is merely holding money for an estate and paying interest on that money, the bank is not a fiduciary and is not required to file Form 1041. Either an administrator must be appointed, or the Secretary may execute a return under the provisions of section 6020(b) of the Code.

HOLDING

Since the bank performed no administrative duties for the estate, the bank is not a fiduciary and is not responsible for filing Form 1041.