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Self-Study Courses

2026 Form 1041: Advanced Concepts in Fiduciary Income Tax (Part 2)

5 CPE Credits $26.40/credit hour
★ ★ ★ ★ ★ 5.0 (9 ratings)

This advanced-level online course builds on the foundational principles introduced in Part 1 and is designed for tax professionals who prepare or review complex fiduciary income tax returns. Focusing on real-world application, this course dives deep into the advanced rules governing Distributable Net Income (DNI), income distribution deductions, and the allocation of income, expenses, and deductions between trusts, estates, and beneficiaries.

Participants will work through complex fiduciary scenarios involving multiple income classes, pass-through entities, pecuniary bequests, marital shares, and in-kind distributions. Special attention is given to high-impact planning areas such as IRC §199A Qualified Business Income, the separate share rule, and gain recognition elections that directly affect beneficiary outcomes. Through practical examples and case-based discussion, attendees will gain the technical confidence needed to navigate compliance challenges, avoid costly errors, and deliver higher-value fiduciary tax advice. This course is ideal for professionals looking to sharpen their expertise in advanced Form 1041 preparation and fiduciary income tax planning.

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2029 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card

Publication Date: February 2026

Designed For
This advanced program is designed for professionals who already have experience with fiduciary income tax returns and are ready to take their expertise to the next level.

Topics Covered

  • Advanced operation of the income distribution deduction and its impact on fiduciary and beneficiary taxation
  • Allocation of fiduciary expenses among income classes and effects on Distributable Net Income (DNI)
  • Tax reporting and timing considerations when funding pecuniary bequests and marital deduction trusts
  • Reporting partnership, S corporation, and LLC income on Form 1041 and beneficiary Schedule K-1s
  • Application of the separate share rule and its effect on DNI calculations and distributions
  • Gain recognition elections for in-kind distributions and resulting beneficiary basis adjustments
  • Qualified Business Income (IRC §199A) calculations, limitations, and allocation between fiduciaries and beneficiaries
  • Case-study walkthrough of a complex Form 1041, including Schedule K-1 preparation, common errors, and best practices

Learning Objectives

  • Analyze how the income distribution deduction shifts taxable income between estates or trusts and their beneficiaries
  • Allocate income and expenses among classes of income in accordance with Treasury Regulation §1.652(b)-3 and related authorities
  • Evaluate the income tax consequences of funding pecuniary bequests and marital shares, including situations that trigger gain recognition
  • Apply fiduciary income tax rules to pass-through entity income, Qualified Business Income (IRC §199A), and the separate share rule under IRC §663(c)
  • Assess planning opportunities and compliance considerations associated with in-kind distributions, including the IRC §643(e)(3) election and charitable deduction strategies

Level
Advanced

Instructional Method
Self-Study

NASBA Field of Study
Taxes (5 hours)

Program Prerequisites
Basic understanding of trust and estate income taxation, including Form 1041 fundamentals. Completion of 2026 Form 1041: Basic Trust & Estate Income Tax Preparation (Part 1)

Advance Preparation
None

Instructor

Klaralee R. Charlton

Klaralee Charlton is a Partner at 3i Law in Denver, Colorado. She practices fiduciary tax, estate administration, and business transactional law. As part of her practice, she guides clients through the process of administering a loved one’s estate including the collection, valuation, management and transfer of assets including financial accounts, real estate, and business interests with a focus on minimizing estate and income tax liability. Klaralee also works closely with trustees of ongoing trusts to ensure compliance and prepares clients’ fiduciary income tax returns annually.

Klaralee has written and lectured on topics including estate and gift tax, fiduciary income tax reporting and U.S. regulations governing the valuation of small family businesses. She is an active member of the Colorado Bar Association, Tax Section and Adjunct Profession at the University of Denver, Graduate Tax Program.

She earned her J.D. in 2011 from the University of Utah, S.J. Quinney College of Law, her LL.M. in Tax Law from the University of Denver in 2013, and her B.A. in political science in 2009 from Bryn Mawr College. She is admitted to practice in both Colorado and Montana.
$132.00 / 5 CPE
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