USA Final Trust return possible?

[DavidCPA in San Jose]

My client is the successor beneficiary of an exemption equivalent trust from his deceased mother (first to die), into which was placed his father's residence as part of funding the trust. The father passed away in 2013, and the house was subsequently sold within the above trust. The state of California withheld state income tax through escrow on the sale of the house. Even with the step-up in basis when the mother died and the house was placed in the trust, there is still a substantial capital gain on the sale. The effective federal tax rate inside the trust is roughly 26%, and is being generated from capital gains rates at mostly 20%, the new investment tax of 3.8%, plus AMT from the tax deduction for the state taxes withheld. The estate attorney is pushing to close the trust, with the help of a 663(b) election to make final distributions by March 6th. If 2013 is the final year of the Trust, my client could have the option of paying the taxes inside the trust, or distributing the capital gain out to himself on a K-1, and paying the taxes personally. This might give him lower overall taxes, or it could set him up for an AMT surprise.

My problem is that the state over-withheld on the taxes (no, I was not consulted before the sale), and now the Trust is looking at a refund of around $9k of state income taxes, to be received sometime in 2014. It looks to me as if this will generate federal taxable income, due to the deduction taken, and necessitate an additional return for 2014, with a final distribution then. Is there any way I can close the trust out in 2013 with a final return and not have to leave it open an additional year just for this refund?