Deceased Taxpayer

[MJG CPA]

Taxpayer (age 20) died in 2006, but father did not get his investments changed over until 2008, so 1099's for 2007 are issued in deceased son's name - about $1,600 in interest & dividends and $700 net loss on sale of stocks.

There is no estate. If I report the income on the tax return of the brother who inherited assets, how will IRS know that it has been reported? I can't file a 2007 return for deceased taxpayer showing income in and then nomineed out, can I? Please don't tell me I have to open an estate for this...

Any suggestions?

[indyscott]

I believe that an "estate" is created for a decedent upon death. Income earned by the taxpayer T while he's alive goes on his final 1040. Income or loss earned after death goes on the estate return.

It' not that hard. You can do it! ..plus you get to bill for two returns. :)

[MJG CPA]

I believe that an "estate" is created for a decedent upon death. Income earned by the taxpayer T while he's alive goes on his final 1040. Income or loss earned after death goes on the estate return.

It' not that hard. You can do it! ..plus you get to bill for two returns.

I know it can be done this way, I was just looking for a workaround so I wouldn't have to go to the trouble of applying for an estate EIN, etc.

[OldJack]

>> brother who inherited assets<<

On and after the date brother inherited the assets the income belongs on brother's tax return regardless of account social security number. If brothers name was on the account, then the account income was not taxable to the estate after the date of death.

[MJG CPA]

>> brother who inherited assets<<

On and after the date brother inherited the assets the income belongs on brother's tax return regardless of account social security number. If brothers name was on the account, then the account income was not taxable to the estate after the date of death.

Account didn't get changed until 2008, so 1099 is issued in deceased's name for 2007. Do you think I will have to report on an estate tax return?

[Maribeth]

Report the income that was earned after the date of death on the surviving brother's tax return. Notate on the Schedule B that it was interest/dividend/whatever reported under SSN ###. If the father receives a letter from the IRS asking about the income, then respond to the IRS with the information that it was reported under the surviving brother's SSN.

Maribeth

[michaelmars]

Maribeth is correct. Who cares if the irs knows it was reported, why open an estate just so they can follow the income. If you get a notice, answer it. Her answer is practical and the way i would do it.

[OldJack]

Account didn't get changed until 2008, so 1099 is issued in deceased's name for 2007. Do you think I will have to report on an estate tax return?

It is irrevelant as when the account changed! It is who inherited the account and when.

[taxtrio]

Look up "income in respect of decedent". If you receive income for a deceased it can be reported as IRD on line 21.

[OldJack]

Look up "income in respect of decedent". If you receive income for a deceased it can be reported as IRD on line 21.

I have never seen instructions to report IRD income on line 21. Normally IRD income is require it to be reported on form 1041 and according to its tax attributes.

Instructions for form 1041, page 3:

>>Income. When completing Form 1041,

you must take into account any items

that are IRD.

In general, IRD is income that a

decedent was entitled to receive but

that was not properly includible in the

decedent’s final income tax return

under the decedent’s method of

accounting.<<

>>The IRD has the same character it

would have had if the decedent had

lived and received such amount.<<