Woman died in 2003 with $75,000 in cash and $900,000 in real estate.
Cash was immediately disbursed at the first opportunity to the five heirs, but property has remained unsold.
No one applied for an FEIN# to create a 1041 filing requirement for the estate. For years, there was no real income, and the heirs mowed the property and paid property taxes out of a jointly owned checking account.
Executor is going to sell the land in March of 2009 for $1.1 MM. (a $200,000 profit). He asked me how to handle it. Technically, the estate will have to report this and give the heirs a K-1 for $40,000 apiece in capital gains, even though each heir will receive $220,000.
But no estate was ever created for 1041 filing purposes, and nothing has prior happened for 5 years, nor has there been a requirement.
How is the application for an FEIN# to be justified for a single transaction? Not only that but the profit will be passed through so the 1041 will not be filing any tax due for the estate. The client simply wants each heir to report a $40,000 gain and be done with it.
I don't think this should happen, as there has been nothing reported to IRS to force the expectation via an information return. I'd like to hear from the rest of you.
If we apply for an FEIN#, one of the questions will be "When did the decedent die?" When we tell them she died in 2003, what will be their response when they realize this estate is 5 years old??
Cash was immediately disbursed at the first opportunity to the five heirs, but property has remained unsold.
No one applied for an FEIN# to create a 1041 filing requirement for the estate. For years, there was no real income, and the heirs mowed the property and paid property taxes out of a jointly owned checking account.
Executor is going to sell the land in March of 2009 for $1.1 MM. (a $200,000 profit). He asked me how to handle it. Technically, the estate will have to report this and give the heirs a K-1 for $40,000 apiece in capital gains, even though each heir will receive $220,000.
But no estate was ever created for 1041 filing purposes, and nothing has prior happened for 5 years, nor has there been a requirement.
How is the application for an FEIN# to be justified for a single transaction? Not only that but the profit will be passed through so the 1041 will not be filing any tax due for the estate. The client simply wants each heir to report a $40,000 gain and be done with it.
I don't think this should happen, as there has been nothing reported to IRS to force the expectation via an information return. I'd like to hear from the rest of you.
If we apply for an FEIN#, one of the questions will be "When did the decedent die?" When we tell them she died in 2003, what will be their response when they realize this estate is 5 years old??
Comment