1099 for deceased husband

[bekzm]

The year 2007, actual Oct 22, 2007,a clients husband died. He did real estate and before he passed away, he was very sick hardly working if any. In 2008 she receives a 1099 for Nonemployee compensation for $1024. So my question is - she is filing single for her 2008 and now has this 1099. Do I report it on his schedule C and subject it to SE or report it on the schedule C as income and expense and report it on line 21? How do you handle something like this that has been dead for over 2 months before the end of the year which gives the real estate company plenty of time to finalize the paperwork? Send her a 1099 with his name and social security on it. How can it be subject to Se when he did not do the service - probably a commission from a listing he had. She doesn't know - too upset to even talk about him - cries all the time. Any ideas on how to handle the 1099?

[DaveO]

I take it this is a 2008, 1099, right? Two options; do noting and be prepared to provide the IRS a copy of the 2007 death certificate should they ever ask or report it as IRD on line 21 of the widows return and again be prepared to anwser a notice if the IRS sends one. If there is no other income reported on his number I can't imagine that $1024 would generate a notice without some other reporting.

[Nashville]

SE is possible

Seems like I remember a court case where a very large severance/vacation package was paid to an employee who died in November but not paid until the following year. Govt maintained that the salary was Social Security/Medicare wages and won.

Of course a W-2 is technically not the same as a 1099-MISC. I think I would claim the income on line 21 and be prepared to answer if need be.

For whatever it's worth, this is also income in respect of decedent. And occurring in a year for which MFJ status is not available to the widow. Comments?

[Burke]

If it was a commission earned and paid in 2007, it should have been reported on Form 1099-MISC in 2007 in Box 7 (assuming he was treated as an independent contractor -- the usual case.) If it was paid AFTER the year of death, it should have been reported on Form 1099-MISC, in Box 3, and the 1099 should show the name of the estate or beneficiary & corresponding EIN/SSN to whom it was paid. It is possible that this is a leasing commission which may have been received in 2008 in which the deceased or his estate/beneficiary is entitled. And there may be subsequent income to the estate and/or beneficiary for 2009, or for as long as the lease runs. Or it might have been a balance on a sales commission not received by the firm until 2008. Sometimes a portion is deferred until a later date. You can call the real estate firm and find out the details. You may need them to do a corrected 1099.