Need some direction on 1040

Mach7 · Post by **Mach7** » Sun Jun 24, 2012 3:00 pm

Ok....being the OCD that i am i can't seen to leave this one alone.

With regards to 1040 Schedule B, Part III, 8 states "did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust?"

the concenses here is that i answered that question wrong...however my Accountant does not seem to think so...regardless, i will assume he is wrong.

I have an RRSP with which i DID file an 8891 election attached to my 2011 1040, (and all previous years as well). but they still (the Firm) check marked this box as NO.

In fact, two different Accountant firms made the same error...one that filed my back returns, and the other the 2011.

Could the IRS forefit my request for RRSP defferal because of this?

I don't think the 6677 penalty would apply for a 3520 form (in this case) as i have (technically) filed one of these forms thru the 8891.

In any case, would the IRS not point this out to me since they see the 8891 form and note that line 8 was check marked 'NO'?

I suppose i could file a 1040X...but it seems to be a long way to go to move an X from one box to another...

hopefully Nelsona will chime in on this

primo · Post by **primo** » Sun Jun 24, 2012 6:34 pm

I backfiled 2006-2010 and checked them all with "no" and had my 8891s attached. All of them were processed by early March. (I called to ask if they were done.) So far I've not heard a word. I wouldn't worry.

nelsona · Post by **nelsona** » Sun Jun 24, 2012 6:43 pm

You are a holder of a grantor trust. This was all explained YEARS ago: which is why we have 8891 in the first place. What is Form 3520 for, if not if you have a grnator trust. And 8891 replaces 3520 for RRSPs.

Mach7 · Post by **Mach7** » Sun Jun 24, 2012 6:48 pm

Exactly my pooint....the 8891 replaced the 3520 for RRSPs...so why would the IRS want duplicate information on line 8?

Maybe to tabulate other granter trusts such as the tfsa etc?

Most individuals i have chatted with have answered NO to line 8 but have filed the 8891s. I am not saying it is correct, just saying it is another 'gray' area that needs better explanation....

If that was not the case then would these 1040snot be flagged when an 8891 was included with line 8 box checked off as NO.

Mach7 · Post by **Mach7** » Sun Jun 24, 2012 6:56 pm

And also thankyou Primo for your reply on this thread...nice to know i am not alone.

nelsona · Post by **nelsona** » Sun Jun 24, 2012 6:58 pm

Everyone files schedule B. The line there reminds the filer that he has other responsibilities: namely filing foreign trust reports, including for RRSP. TFSA, and a multitude of other trusts.

They then have the choice to file 3250 or for RRSp 8891.

Mach7 · Post by **Mach7** » Sun Jun 24, 2012 7:09 pm

well....i am in agreement with you...but they could have extended the sentence to say;

"you may have to file Form 3520, or for 8891"

I think a number of Accountants seem to feel that the 8891 bypasses this reporting obligation (?),,,nonetheless, if an IRS approved Accountant Firm(s) can't seem to get these things right, then what hope is there for regular individuals like myself.....

nelsona · Post by **nelsona** » Mon Jun 25, 2012 10:22 am

8891 substitutes 3520 only for RRSPs. Do you know how many 3520 filers don't have RRSPs.
IRs can't explain everything on their forms, for dumb accts.