News Letter 3

Inter-Est has remained stable without many major changes since the last Newsletter.  Several problems have appeared that cannot be computed directly with Inter-Est.  I wish that we had a solution to all of them, but the most that I can say is that we are working on some of these problems and trying to figure out some of the others.  If you have one of these problems, please call us.

Part of Interest claimed on 1041

In the manual, I make a suggestion on how to treat the interest deduction where some of the interest was claimed on an income tax return.  The manual suggests that you understate the "JK&L deduction before interest" by the amount of interest that was claimed on the 1041.  This would offset the fact that the computed interest deduction is too large by that amount.

Where the Estate wants to continue to claim the interest on the 1041 for the period in question, if the amount claimed on the income tax return exceeds the interest accrued or paid in that tax period after this computation, the income tax return may require amendment to reduce the interest deduction claimed.  This would change the plugged amount used for this computation and required some trial and error computations.  if the statute of limitation has run on the income tax return, you could also run into an equitable recoupment problem.  See below.

Where the estate wants to stop claiming the interest on the 1041 for the period in question and claim all the interest on Form 706 there are several problems.

1. If the statute of limitation has not run on the income tax return the 706 can be computed normally.  The estate would probably need to file an amended return for the income tax period in question.
2. If the statute of limitation has run on the income tax return on which the interest deduction was claimed and you want to move the interest deduction to the estate tax return, then you have run into the problem of equitable recoupment.  This problem is discussed in Rev. Rul. 81-287, 1981-1 CB 183.  This creates a more complex situation.   a series of computations will be required.

3. 

Section 2044 Property

Inter-Est has a provision that computes the §2207A right of reimbursement for §2044 property so that this right of reimbursement can be added back to the residue for the purpose of the computation of net residue.

This feature has been in Inter-Est for several years and has not been used much.  This is a fairly complex feature even though it just asks for the dollar amount of the §2044 property.  The routine recomputes the federal tax with the §2044 property removed.  This is similar to the second limitation computation in the Credit for Tax on Prior Transfers.

Last year I had a request for a similar feature for the New York tax.  This feature was added for New York with no problems.

This year we had a request for a similar feature for the Ohio tax.  A simple version of this feature was added for Ohio.

There is a chance that a similar feature will be needed for all states eventually.   As this feature is specific to each state, I cannot write one generic routine to do all states.  I will probably add this feature for states as it is requested.

Sec. 6166 Limit to Amount Drawing 4%

An unusual §6166 computation problem has come up a couple of times.

Some businesses do qualify for §6166, but do not qualify for the 4% interest rate.   For one business that does not qualify for the 4% rate, you can ignore the §6166 election, because all amounts due draw interest at the same rate.

The problem comes up when there is more than one business that qualifies for the §6166 election.  One of the businesses qualifies for the 4% rate and the other is a business that does not because of §6166(b)(8)(A)(iii) or §6166(b)(7)(A)(iii).  The combination is not handled properly by Inter-Est.  If you have a problem in this area, I would be glad to work on it with you.

If you have any suggestions, I would appreciate them.

New York Out of State Property

The way New York makes allowance for out of state property was changed for dates of death after 5/25/90.  This is because of an amendment to §952 of the New York Code in 1990.  Inter-Est has been changed to reflect this.  If you have a New York estate with out of state property and a date of death after 5/25/90 you need an update.

Foreign Death Tax Credit - Treaty

Inter-Est has been changed so that where the foreign death tax credit is based upon a treaty, the credit is computed after the Credit for Tax on Prior Transfers instead of before.

Form 706NA Computations

Limited support has been added to Inter-Est for computation of tax on NonResident NonCitizens.  it will now do interest computations for simple 706NA computations.

Problems with Networks

Over the last six months or so I have started getting some calls from users that could not load Inter-Est because they were out of memory.  All of these users had a program loaded that took up memory and did not leave enough memory for Inter-Est.   One had a large version of Sidekick loaded and the others had a large LAN (Local Area Network) loaded.

There are several possible solutions to this problem:

1. Unload the LAN before trying to run Inter-Est.
2. Buy a copy of MSDOS 5.0.  This might free up enough memory to solve the problem.
3. Buy a copy of DR DOS 5.0.  One of my users indicated that this solved her problem.
4. Call us and we can furnish a special Overlay version of Inter-Est that will take up less memory and be able to run with your LAN.

The special version of Inter-Est that we offer might run a little slower, but you might not be able to tell the difference.  The special version must be run from a disk larger than 360K as I cannot compact the Overlay version like I can the standard version.

Problems with Printers

Inter-Est sends the printer output to the LPT1: port.  If you are using a different port, you should use your DOS MODE command to redirect printer output.   Several users have had a problem where Inter-Est would not print.   They usually had a laser printer.  Their printer was using the COM1: port (asynchronous communications adapter) instead of the LPT1: port (parallel printer port).   To use Inter-Est with such a printer you should redirect the printer port to the port that is used by your printer.  You would do this from the DOS prompt by entering:

MODE LPT1=COM1<CR>

and then entering Inter-Est in the usual manner.  When you finish you should put the printer port back like it was.  Do this by entering from the DOS prompt:

MODE LPT1<CR.>

You could create a batch file to automate this printer redirection by putting the following three lines into a batch file:

MODE LPT1=COM1
EST
MODE LPT1

If you have a printer problem and cannot get Inter-Est to print, please call.

Gift Tax Program - GFT

I have done some work on a gift tax program that is similar to PRE.  The program works all right, but some needed features such a reverse QTIPs have not been added.

If any of my users wish to have a copy of this program, please contact me and we will send you a free BETA copy.  A short manual is included.

Possible New Version - Some Day

I have started preliminary work that might result in a new version of Inter-Est that will be easier to use.  The new version will be character based, will support a mouse, and be similar to the standard CUA interface being used by most programs that run on Microsoft Windows.  This is a long term project and might take one or two years to complete.

Maintenance and Support

If you are having trouble with a computation using Inter-Est, please call us.  We provide support to all of our users.

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Cecil Cammack, Jr. dba
Cammack Computations Co.
P. O. Box 725, Cleburne, TX 76033
Voice: 1 (800) 594-5826
Email: cammack@inter-est.com
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