Parent left revocable trust?

[equinecpa]

I'm doing a 2008 personal 1040.

My client's mom died in 2007. The mother left stocks to her two daughters which were in a revocable trust. My client has given me a 1099-div and 1099-B for the stock sales which were reported in the name of " client x, client y succ-ttees Mom revocable trust". I don't know who the tax id associated with the 1099 belongs to.

There is about $400 in taxable dividends, $1100 in tax exempt int and gross proceeds of $70,000. I'm going to confirm but I don't believe a decedent estate return was filed.

I was planning on reporting 1/2 of the dividend and exempt interest but am a bit stumped on the proceeds from the sale of stock. The sale took place less than 6 months after the Mom died so I assume for her final return, FMV at time of death would have been used for proceeds. That would become my clients basis correct?? The 1099-B shows the Mom's original purchase dates and therefore has used that as the ACB.

Should I get a copy of the Mom's final return? Does that affect anything I do for my client? ie: If Mom's final return was not prepared correctly it doesn't change what my client should do does it?

I want to put this one to rest (pardon the pun!)

Carolyn

[DaveO]

Is this a 2008 1099 you're working with? If the ID number is the trust I would say a 1041 needs to be prepared. A look at mom's final return would be helpful as well to be sure it was prepared correctly.

[JON]

Were the items

distributed. revocable trust means it becomes irrevocable at death. Have they renamed everthing or not??

[Burke]

I'm doing a 2008 personal 1040.
My client's mom died in 2007. The mother left stocks to her two daughters which were in a revocable trust. My client has given me a 1099-div and 1099-B for the stock sales which were reported in the name of " client x, client y succ-ttees Mom revocable trust". I don't know who the tax id associated with the 1099 belongs to.
There is about $400 in taxable dividends, $1100 in tax exempt int and gross proceeds of $70,000. I'm going to confirm but I don't believe a decedent estate return was filed.
I was planning on reporting 1/2 of the dividend and exempt interest but am a bit stumped on the proceeds from the sale of stock. The sale took place less than 6 months after the Mom died so I assume for her final return, FMV at time of death would have been used for proceeds. That would become my clients basis correct?? The 1099-B shows the Mom's original purchase dates and therefore has used that as the ACB.
Should I get a copy of the Mom's final return? Does that affect anything I do for my client? ie: If Mom's final return was not prepared correctly it doesn't change what my client should do does it?I want to put this one to rest (pardon the pun!)Carolyn

Sounds like the stocks were not distributed from the trust at Mom's death (which is generally the whole point of a revocable living trust -- to avoid probate and distribute the assets simply). So it appears you need to do a trust return for 2008, using the trust EIN, and two K-1's to divide the taxable income (assuming it has been distributed to the beneficiaries.) You also need to determine if anything ELSE is still in the trust's name and advise them to retitle. While Mom was living this would have been a disregarded entity and everything would have been on her return (regardless of whether the trust EIN was on any 1099, etc). FMV at date of death is your basis. Depending on when she died in 2007, there may have been income in the trust for that year that would be taxable to the bene's.

[equinecpa]

A little more information:

No final return was filed. The deceased had not filed a return in years since her income didn't require filing. Obviously the deemed sale of her shares would have made 2007 a required filing but that was overlooked. No 1041 has been prepared and all assets were distributed by March 2008.

I'm planning on reporting 1/2 the 1099-div income and 1099-int income for 2008 on my clients return. Calculating her share of gain/loss on the shares from Mom's date of death to disposition and reporting that, and then completing her return. If a return had been filed correctly for Mom this would have been the net result.

Can you see anything wrong with this plan of action? Of course I've informed my client that a 2007 final return should have been prepared...

Carolyn

[Burke]

If Mom was not required to file in 2007 due to her income prior to her death being under the minimum as in previous years, then no final return for her is (or was) necessary. The stocks were sold after her death per your post. If the shares had been distributed to the bene's prior to sale, then they would have reported the sales proceeds and any dividend income after Mom's date of death. (Proper procedure would have been to file 1041 using fiscal estate year; i.e, start at date of death, end 12 mos later in 2008, or when all assets in trust were disbursed.) Your method will accomplish the same end result with 1/2 of stock income on your client's 2008 return. What did the other daughter do? If she did not claim her half, she may have to file an amended return unless she has not filed yet either. A 1041 K-1 would have provided this info to the IRS and it would match to the SSN's.