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The main concensus of this thread is to have available money somewhere. Whichever venue you choose, just DO it. I read somewhere that only 20% of taxpayers have $2000 or more in a savings account. It is probably even less at the present time.

Also instant gratification. Picking up that "deal" on Amazon and having something desired in your hands the next day is much easier and more exciting than sticking that $500 in the bank and someday being glad you did.

If only it was that easy for CA. There will be a 1099S for the sale of the home with $800K on it. CA FTB does not know what the basis is on the property. Most likely you will be talking to them at some point if you don't file a return. I would file the 1041 and 541 with zero tax liability. You start the statute and take the position that there is no tax due. You have given them the details they need to show no cap gain by filing the Sch D with the return. Hopefully it is all done and your client can move on. IMHO, you can do this now, or you can prove that there is no tax due later, but one way or another you are going to have correspondence with the FTB. Tom Longview, TX

Please revisit Patrick Michael's explanation above and complete a support worksheet. "Support" includes items not paid or having a direct association with the mother's bills so you can't just add up some bills that were paid. The FMV of housing is one such example, and the support worksheet will guide you in its calculation and allocation to the mother because the number of people n the household are factored in.

Vanguard's MMA currently has a yield of 4.66%

Thanks Tom, my client was a resident of CA when the house was sold. Nonetheless, I will ask about the 592B document. Also, I'm not sure at this time if an EIN was applied for. I am still waiting for that information as well. Thanks for your help!

I would wait. Watch for a 592B withholding form in the sale documents. CA withholds on out of state sellers of property in CA. If CA withheld and the trustee does not know to to give you that doc, you may be leaving a refund from CA on the table. The 592s are generally given at closing and not mailed the next year. Check the TIN on the 592B because it may be the SS# of the decedent and not the EIN of the trust. Look at the sales docs if you can and see if there was withholding to the state. Tom Longview, TX

I have money in a savings account that is currently earning 4.0 %

Tom, This is the exact route that I have let the fiduciary know they have to do. As for filing this now, the deceased passed in January of 2024. I can't prep a final 1040 but can the 1041 and CA541 be filed now using 2023 software? It appears to me that I should wait until Jan 1, 2025 to file the form 1041. Currently, I have the fiduciary looking for the disclosure statement, and any associated expenses. I don't think they will get the 1099S until after the first of the year if they even get it at all.

Lee you bring up a very good point. I am the Treasurer of our HOA. I will have to read the by-laws and authority the officers have again to see If any officer can bind the HOA, I think that would give them substantial control. I have read D.13 several times and continue to do so. In all reality, no decisions can be made without majority board approval, and no board member can remove one of the officers/board members. In our by-laws a recommendation to remove an officer can be made but again the officer cannot be removed without majority board approval. Not one single member has the authority to do anything. The reason I stated the President is because he presides over the meetings and is the officer that communicates with media and gives orders to the management company. Probably the safe way is to include each board member as a beneficial owner.

However, this was not the case with CDs. I have been laddering CDs for the past several years and have reaped decent benefits. Particularly, in the past two years. I purchase a CD at the end of every tax season. BUT, I cannot even talk family members into doing the same. Mainly, I believe that they just don't understand that they have nothing to lose. I did convert a few clients who totally GOT it and enjoy playing the renewal game. The caution is to always leave enough of a cushion in regular savings for emergencies, if needed.

Oh, the tangled web we weave.

But technically only in certain cases. Section 2032(a)(1) states that for assets sold within 6 months of death, an election can be made to value on date of disposition. However, paragraph (c) says: "Election must decrease gross estate and estate tax No election may be made under this section with respect to an estate unless such election will decrease— (1)the value of the gross estate, and (2)the sum of the tax imposed by this chapter and the tax imposed by chapter 13 with respect to property includible in the decedent’s gross estate (reduced by credits allowable against such taxes)"

I agree with Tom. There will be a 1099S issued to the trust, and neither IRS nor CA will know the basis unless you file the tax forms. The trust may actually show a loss that can be passed through to the beneficiaries. It may have paid tax prep fees for the decedent's final tax return and will pay for the 1041 and CA forms (allowed to deduct even if not paid by the filing date if amount is known). If the house was sold within six months or so of death, the sales price is the FMV, but surely there were closing costs that will net in a loss. The trust can also deduct any real estate taxes paid before and at the time of sale. Were there any attorney fees to handle all this? Did the trustee receive a fee? Court fees? More deductions.

She need to talk to an attorney to answer that, my guess is the IRS could seize any property that was separately or jointly owned by deceased spouse. How much balance due are you talking about?

At this point, the only sane advice is to suggest they work with a qualified probate form, local to the locality where any property in the decedent's name is located. There is absolutely zero reason not to use proper representation when the estate may leave a positive balance.

If she is executor or trustee, isn't she required to administer those entities and satisfy any debts, including tax debts, of the estate before any inheritance payouts? The last thing she would want to happen is to have IRS create a SFR later on and come knocking.

For the past few years, interest rates were so low you were getting essentially 0% interest on savings accounts and money markets. If a client doesn't take steps, they get .3% at our firm. You can get 4.66% by sweeping into a money market. When I got into investments in 1992 it was very common to find people who had never owned a stock. Today it is very common to find someone who has never owned a bond or CD.

When clients bring their paperwork in; one of the things I look for is interest income. So few have any. That doesn't mean they don't have any retirement plans or investment income; but where is their cushion of ready cash for an emergency. So few have it. I think that Kathy said it best in reference to wants and needs, budgeting, etc. We taught our boys to save from little on. When they got an allowance, they could spend half and half went in the bank. That learning has carried them well into adulthood and nearly to retirement age. I am so proud of them AND their children. I try to counsel my clients in the gentlest of ways. Sixty-five years ago we started life as a young married couple with not much to our name. I am proud to say that we have practiced what we preach and are comfortable now with what we have built. And both still working...just because!