'10 1099 to '09 decedent

[BP.]

Taxpayer died in 2009 and final 1040 was filed. His brokerage assets of about $100K passed into a trust (?) to be divided among the beneficiaries, who received checks for their respective shares from the brokerage. In 2010 the brokerage firm has issued a 1099 (B, Div & Int) to the name & SS of the deceased, and it was sent to my client- the trustee.

I may have some of these details incorrect, since I don't know about trusts, but the client has asked me about the 1099. I referred him back to the brokerage firm. How should this have been reported? Was it correct to issue a TY 2010 1099 to the deceased? He died in GA and the lawyer who created the trust said that no inheritance tax return needed to be filed.

[JON]

Brokerage assets

are in the trust. that is where the income is reported on the 1041. If the never changed the name on the account you have a problem, if the account was changed to trust the brokerage house has the problem and if contacted they will issue the correct 1099s.

[Burke]

1099 should have been issued in trust's name and ID if all the brokerage assets passed to the trust. Now, it is possible it was a Revocable Living Trust and no federal EIN was established since an RLT is used as merely a transit of assets to the bene's outstide of probate (if they did not retain the trust.) So the brokerage probably never had a fed EIN and just issued the 1099 in the name of the deceased because that is what they had on record. If the brokerage itself actually issued checks to the bene's as you describe, why didn't they have all the bene's names and SSN's on individual accounts for them before distribution? Anyway, you can still treat it as nominee interest, dividends and gross sales, as long as everything was equally shared. I am assuming it was an RLT and is now terminated. If it was a testamentary trust under the will and is still in existence, the 1099 is reportable by the trust as income, a distribution deduction is claimed, and K-1's go to the benes with those amounts passed through to them.

[BP.]

Thank you both for taking the time to post- very helpful!