What I have is mom died 2011. Estate set up. Real estate value 156K and checking account(<$5000.00). Will passed everything to 4 heirs. No 1041 ever filed. Real estate was sold under the estate name and fed id # in 2016. Funds deposited in estate checking account. In closing account and filing final accounting with commissioner in Feb 2017 all funds paid out. 1 heir during this time frame paid all Ins,taxes, utilities and repairs on said real estate. At time of dispersement , heir was refunded all these expenses. Heir filed annual accountings with commissioner and paid fees each time. The way I see this is that the estate should file a final to clear real estate since it was reported in estate #. The second thing I think is to create a spread sheet on the real estate showing all the fees paid back to the heir that paid them. That being said, do all the expences associated with real estate become deductible by the heirs. BTW Real estate sat empty all this time. What do think is the best possible way to handle this mess?
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My Take
1. returns were probably not required in past years due to too little income. Expenses paid for and claimed in those years would produce no tax benefit and would have been lost.
2. Because of this I would say the reimbursements for those expenses are not passable to the beni's, except for those paid in the final year.
3. The beni who paid the expenses should be reimbursed first and then the remaining funds split 4 ways. -
added to basis
Wouldn't the expenses paid, other than real estate taxes be added to the basis of the property. Even the taxes could but an election is required, maybe also for the other items and election might be too late now. Not real familiar but these are my thoughts I would follow up on if it was my client.Comment
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