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Decedent and sale of stock


Max W

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The decedent died Aug 31 of last year.   The broker issued a 1099B with the valuation as of Sep 1, forming the basis for the benes

So far so good, but what about the gain from Dec 31,2018 to Sep 1, 2019?  Wouldn't that be income in respect of a decedent?

In other words, if a stock was valued at $100 on Dec31, 2018 and $120 on Sep 1, 2019, there would be a $20 CG.

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If the decedent did not sell the stock then there was no gain.  The stock would be valued for estate purposes at the value on his date of death, and if there were any estate tax due that would be calculated at higher value.  But the "gain" that he never recognized is not income in respect of a decedent.  At least that is my understanding.

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31 minutes ago, Gail in Virginia said:

If the decedent did not sell the stock then there was no gain.  The stock would be valued for estate purposes at the value on his date of death, and if there were any estate tax due that would be calculated at higher value.  But the "gain" that he never recognized is not income in respect of a decedent.  At least that is my understanding.

I think you are right and I am just over thinking this.

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If the decedent did not sell the stock there would be no gain on the final 1040 which would only include the income from 1/1 to 8/31.  The estate would then file a 1041 and if they sold the stock within the estate the tax would be paid by the estate prior to distributing the cash to the beneficiaries. 

If the stock was not sold and was instead distributed to the beneficiaries then their basis would be the Sept 1 basis.

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I just looked at a deceased TP's 1099b. Some sales are 2 to 5 months after death and some are have acquired dates 1 to 3 months after death. I also spotted some dividends showing up 3 to 4 months after death. How to get this stuff in the software without it bouncing all over the place, and to makes sure we get a match to the 1099b which IRS will be looking for is a nightmare. Anyone have any easy solutions to this,  I am all ears and eyes. Thanks

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16 hours ago, TAXMAN said:

I just looked at a deceased TP's 1099b. Some sales are 2 to 5 months after death and some are have acquired dates 1 to 3 months after death. I also spotted some dividends showing up 3 to 4 months after death. How to get this stuff in the softwareor on an estate 1041, if a 64 without it bouncing all over the place, and to makes sure we get a match to the 1099b which IRS will be looking for is a nightmare. Anyone any easy solutions to this,  I am all ears and eyes. Thanks

It is income income in respect of a decedent (IRD).  It would not be reported on the 1040.  It would be income reported on form 1041 as a trust, or as an estate if the 645 election has been, or will be made.    A bank account should have been opened under the trust/estate where the funds should have been deposited.

The broker should have been advised of the date of death.They can provide a new 1099-B with the FMV of the stocks at that time, so the basis can be established. 

 Was there a will?  A Living trust? Is there an executor, or trustee you can talk to.  There are more questions, but this will get you started.

 

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I have done a lot of these.  You have to report everything on the decedent's final return if the 1099 is in his/her name because the IRS computers will be looking for those numbers.  Then back out what belongs to the estate.  You have to do these calculations manually.  I identify the negative amounts as "to be reported by estate" and the EIN.  Then on the 1041 I put the payer as "reported to" and the decedent's SS number.  Charge a lot!

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