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If he inherits the account, he inherits the interest too. He will report the interest income because he's the one who received it.

From Pub 559: Fees Received by Personal Representatives All personal representatives must include fees paid to them from an estate in their gross income. If you aren't in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on your Schedule 1 (Form 1040), line 8z. If you are in the trade or business of being an executor, report fees received from the estate as self-employment income on Schedule C (Form 1040), Profit or Loss From Business. If the estate operates a trade or business and you, as executor, actively participate in the trade or business while fulfilling your duties, any fees you receive related to the operation of the trade or business must be reported as self-employment income on Schedule C (Form 1040).

A veteran IT person would have also said "are you sure you can restore from any source, have you ever tried?" Looking at my mess of a desk, I have 4 local backups of various timings. SD, USB, portable drive, and on a second computer. Those handle the day to day issues, like stupid human actions. Two of the locals are triggered every half hour, and the other two are daily. While I don't like doing the same work twice, I can live with half hour of rework. For remote, I use two commercial locations, in separate areas of the country. I use two locations of my own control, also in separate locations of the country. I worry zip about compromise. I encrypt before saving in any manner, and the commercial services encrypt again. For most here, something similar to what I do is not out of line, since you also have data which must be kept secure, and must be able to be recovered from scratch. My sad fav backup story is someone who paid someone to setup an overnight backup for their system (server). All was coded correctly, other than no one paid attention to the storage location being turned off every day at closing, so there was never a backup made. Lousy power setup had the storage decive in a light switch. The Paul Harvey was the main data was lost when someone hit an on the floor cheap power strip.

Medicaid is a college class of it's own. Sometimes family members can receive money tax free as a care-giver, but be careful how that contract is written. The money has already been paid with little forethought so - hey - let us know. I'm at that wonderful stage right now where my mother with dementia has given away loads of money that Medicaid is not happy about it. But I don't think Joel Olsteen is going to be writing a check back to the nursing home now. I'm a little late getting the power of attorney that I needed months ago, partly my own fault because I was not realizing how wacky she had gotten. Not exactly close to her, and certainly not happy trying to figure out what she's done with all her money.

Good point, the IT person I spoke told me something that is probably common sense but one is not aware of it because IT is not my forte, he said me, how would I restore a backup if my office was to burn down? I was like from external drive Hard drive connected to my computer.... Then I got his message.

Having everything in someone's cloud makes me nervous. I still want a little hard piece of plastic and metal to back up on. Need to find out how much access google has to your info. My google knows when I sneeze. What will my google cloud know?

I stopped using organizers. I have a link on my website that tells them the documents that I may need to prepare the return. Organizers are just too frustrating. Tom Longview, TX

I still have those too, back to the 1999 tax year when it was called Saber Pro!

@Catherine, they will make great targets! Especially the 2012 disks. I bet you can hit them at 150 yards... Tom Longview, TX

Yes, but not subject to SE tax. You also do not 1099 accountants or attorneys unless directly related to a trade or business.

My reading now that I have more time says, that, according to SECURE 1.0 an eligible designated beneficiary who is less than ten years younger than the account holder of the 401 k who dies before the required beginning date of their RMD is exempt from the so called "ten year rule" and can use their own life expectancy to calculate their RMDs. You have until 12/31 of the year following the year of their death to begin taking you distributions. Frankly it took me quite a bit of reading to arrive at that conclusion. It shouldn't have to be that complicated !

I agree. Be careful with the Medicaid rules. Because the TP is a family member, Medicaid may call this an improper transaction and disallow coverage. I'm not sure on this but after caring for my mother for a few years and dealing with Medicaid, I wouldn't take any chances. The folks I dealt with in Ohio couldn't even add and could never get my patient responsibility correct. Very simple math, mom gets x dollars and you're allow to keep 50 dollars for personal care. Maybe it was because I was using normal math and they were using common core??? I was threatened with fines for failure to properly pay and accused of improper transactions because I did the spend down exactly as they directed me to. After one year and a couple of months they finally figured it out. Great!!!. Not so fast, somehow I overpaid. I paid the same amount every month for three years. The nursing home bookkeeper couldn't figure anything out and told me to quit asking cause she had no answers. It really became a joke after a while. That overpayment was applied to her funeral as Medicaid insisted it was right. My best suggestion to your client is keep every document from Medicaid and don't discard anything. Keeping the docs was my saving grace.

A legal question likely. Could even get into a where did the funds come from, community property, etc. I recently had to pay a debt from 1971, which should not have been in place anyway, to get a home sold in estate. The amount was simply too small to hold up the estate, so for the OP, maybe the tax is small enough it is just best to report/pay.

These debt relief programs are BS and we all know it. But it's always an older person that gets scammed into them. This guy paid payments thru some program, and has proof of the payments that was supposed to pay off a credit card. But now - 2 years later - he gets a 1099C because the debt was discharged and his payments apparently didn't go to the CC company and the debt relief company cannot be found. What to do. Seems hugely unfair that he should have to pay tax on this. But until this came in the mail last week, he didn't know he had been scammed. I'm not sure if the IRS gives any room on this kind of stuff.

I use Backblaze. It's fast, works well and it's reasonably priced. But I've heard that a database like ATX might be unusable when using an online backup because of the way both databases and online backups work. Some online service have a separate database backup option.

We used to hang the AOL disks in the garden near the tomato plants to scare away birds and groundhogs.

Darn I thought I was the only one that does that. Some of mine I drilled a hole in and put a heavy washer on it. Wind blows makes a noise the birds don't like.

We send out a document checklist. There is ONE client who requests (and fills out) an organizer. Almost anyone else who ever got one fills out a couple of tiny items, then writes "see attached" everywhere else. I want the original docs, so that's what we request.

Hang them on your house to scare away woodpeckers.

Does not sound like IRD to me. If it were IRD, it would have accrued before death and paid after death. This sounds like a case of 2023 interest paid on account that was not transferred from name of spouse who died three years ago.

Here a very good article in the Journal of Accountancy: https://www.journalofaccountancy.com/issues/2023/apr/beneficiary-iras-a-guide-to-the-rmd-maze.html

That would be the case if the PR was paid extra to operate the trade or business. If the PR fees are paid strictly as a percentage of the estate assets you would not allocate any amount to the operation of the business per RR 58-5.

Yes the Medicaid 5 year look back rules vary from state to state.

The beneficiary (unless spouse) is required to withdraw all the funds within 10 years and you should take yearly distributions. Doesn't matter if the original owner was taking distributions or not. Even before this new set of rules, inherited IRAs were supposed to take immediate RMDs based upon their own life. There are exceptions to the 10 year rule - spouse, disabled child, child of the deceased who is a minor and if the person inheriting the IRA is <10 years younger than the original owner. As your brother, you MUST begin taking RMDs now. Whether it is your life expectancy or 10 years I do not know. You'd be called an "eligible designated beneficiary." I think it's probably your life expectancy if you wish it to be but check with the custodian.

One of my fellow enrolled agents had fraudulent charges on a credit card in his name. He thought he had it all cleared up (around $18k, over half of which was interest charges) but then received a 1099-C for the full amount (which he reported on his return). Not the same thing, but makes me think it might be a tough nut to crack.

I "Think" you have to start taking them now. IRS just finalized this rule, and I "think" they are automatically waiving the penalties for 2021 & 2022. And I "think" if you take the RMD this year before the due date of your return and then by 12/31 for your 2024 RMD you will be OK. I "Think" the rule for the inherited 401K for you is the same for any first year RMD requirement. As an aside, I am pretty sure you can roll this into an inherited IRA, and I would recommend that you do so, because I "think" the 401K provider does not have to allow you to do what the law says you can do. The 401K plan rules may not be updated. If it was me, I would get it into an inherited IRA and start taking the RMDs over my life expectancy. Lots of "thinking" but nothing concrete from me. Sorry. Tom Longview, TX

He was scammed and TCJA suspended any possible deduction. There was a bill introduced last month to reinstate the T & C Loss deduction, but I don't think it has gone anywhere. Unfortunately she needs to report the COD income.

If this was from an oversight of changing account from wife then yes, he needs to claim it; and get the account ownership transferred.

There are legit entities which help. They negotiate for the debtor and arrange to disburse the "monthly" amount, sometimes/usually getting a fee from the holder of the debts. They don't usually advertise - meaning the ones on TV are likely less than desirable.

I would guess that your client "believed" he was paying the credit card company for the debts and the actual paperwork says he paid the debt relief company for their "services" of getting the debt discharged. Just my opinion, but I think your client is on the hook for the taxes on the discharged debt. Tom Longview, TX

This is really cloudy right now because the rules have changed a bunch. If I understand it correctly, as an eligible beneficiary (because you are not more than 10 years younger than the decedent), you may take the RMDs based you life expectancy. Below is an excerpt from the IRS website: Non-spouse beneficiary options In 2020 and later, options for a beneficiary who is not the spouse of the deceased account owner depend on whether they are an "eligible designated beneficiary." An eligible designated beneficiary is Spouse or minor child of the deceased account holder Disabled or chronically ill individual Individual who is not more than 10 years younger than the IRA owner or plan participant An eligible designated beneficiary may Take distributions over the longer of their own life expectancy and the employee's remaining life expectancy, or Follow the 10-year rule (if the account owner died before that owner's required beginning date) Tom Longview, TX

I filed case support to ATX yesterday. It's resolved now.

enter "Plan Loan Offsets" in the irs.gov search box for some fun reading--IRC 172(p)-1. My reading of it is that it counts as an actual distribution--combined with Code 1, looks like a penalty as well, IMO.

If son is not interested, let it go - just tell him to pack her papers in a box, in case IRS ever asks... D/WI

Yes, basis is exercise price plus the ordinary income reported.

I don't get the advice to not report anything on the tax return if selling whatever at a loss when a 1099K is received. I suspect IRS computers will be busy matching those forms with tax returns and spitting out notices if matching amounts aren't found. If you paid $2000 for your couch and sold it for $1k, PayPal will send your a 1099K. I'd put it on the 8949 and code it as personal so the loss won't compute.

ATX has along long history of not providing entity forms to smaller states.