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Estate and unclaimed property


jasdlm

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I am helping someone with an intestate estate.  I believe the decedent had not filed tax returns for several years (can't find any evidence of returns being filed).  The year before decedent passed, she received a LARGE check (over $100,000) from the State's unclaimed property division for past dividends (multiple years worth; estate is not huge).  State filed no 1099, of course.  

I do not have a list of what the dividends were or what years they represented.  Best I can figure is to file a final return for decedent (which will now be late as decedent passed in 2016) and claim the entire amount as income.  I have no idea what her SS was but can try to back in to it through bank statements.  This is going to cause a huge tax and penalty payable by the estate.  The way I calculate it, the tax will be approximately the value of the estate.

Am I missing anything, or does anyone have any brilliant ideas?

Thanks.

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For the social security benefits, if you have any back year return or 1099-SSA to use as a starting point, it should be fairly easy to calculate the SSA benefits because the COLA increases each year are known, and one of those years had no COLA increase at all.  You should be able to get to the exact amount or within a few dollars and then verify back to bank deposits even if Medicare was being withheld since those premiums are set also. The only variable might be if those benefits are also net of FWT or drug premiums withheld. 

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I had another thought on this too. Are you sure that no 1099-DIV was issued by whatever state paid out the unclaimed funds?  I know that here DE does issue 1099s for any divs that are more than $10 and issues other 1099s just like the company or original holder would have. Perhaps that is worth contacting the state to see if there is any additional information it would be willing to provide so that as much of that $100K as is possible can be taxed as qualified dividends using the lower cap gain rate.

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I guess it is too late to donate that money to the PACUN foundation vs giving it to the IRS.

The first thing I would do is to file Form 4506T option 8 and maybe ALSO request a copy of any tax returns available from the IRS. Let's say that those dividends were split in 10 years, maybe that money was available for deceased and therefore you will have to file 10 years of taxes for 10K each year. That will increase your fee and reduce their taxes. Remember the doctrine of constructive receipt.

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4 hours ago, jklcpa said:

I had another thought on this too. Are you sure that no 1099-DIV was issued by whatever state paid out the unclaimed funds?  I know that here DE does issue 1099s for any divs that are more than $10 and issues other 1099s just like the company or original holder would have. Perhaps that is worth contacting the state to see if there is any additional information it would be willing to provide so that as much of that $100K as is possible can be taxed as qualified dividends using the lower cap gain rate.

Thank, Judy.  I called the State Treasurer's Office, and they told me that they do not issue 1099s.  I could try again and see if there is some way I can get a breakdown of the Dividends by year.  They are individual stock dividends, and I think it is likely that many if not all are qualified.  I'll give it a shot.  Thanks again!

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2 hours ago, MDEA said:

They will have the original 1099's and social security.

They may have filed SFR's that included those dividends, for all you know.  T/p may have lost refunds, instead of having tax liability.  Or each year's div's didn't bring that year's income above std ded & exemp levels.

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I have found that many elderly who have unclaimed property held by their state  were stockholders through a demutualization.

The state (WA) will describe the property as "stock dividends", "stock sale proceeds".   Washington does not issue form 1099

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