Decedent's return - suggestions?

[FEDUKE404]

Client died in summer of 2010. Executor has all relevant paperwork in order.

Investment account and bank accounts in name of decedent were closed shortly after death, and replacement accounts were soon opened with all assets transferred directly. It is anticipated there will no sale of assets in the accounts, but merely eventual proportionate transfer to the heirs witihin the next couple of months.

Here is the problem: Instead of applying for an estate EIN, the new accounts still show the Soc Sec number of the deceased.

My concern is that if the post-death income is not reported on the decedent's final 1040 then the IRS could easily discern unreported income for that Soc Sec number.

Since the cow is out of the barn, the best solution I can come up with is to separately show the post-death income on the decedent's return, and then immediately back it out with some comment like "less amt reported by estate." Kind of a sloppy nominee distribution, but it should work. That way the IRS would at least "see" all of the 2010 income reported in the name of the decedent.

Does anyone have a better way to do this - and do you think this approach is valid? (Of course, getting an EIN would have solved things tremendously in the first place .....

FE

[Burke]

You are right on target, and in real life this almost always happens, as the income stops being taxable to the decedent on the date of death, and begins being taxable to the estate on the following day, regardless of what the 1099's say. And the accounts are routinely not changed until later, sometimes much later. So you take the figures from the monthly statements, and adjust on the Sche B with a nominee distribution. I have done this many, many times and it has never been an issue. If you are not doing both returns, I would prepare a 1099DIV or INT or whichever is necessary for the estate. If you are doing both returns, it really should not be necessary. An EIN should be applied for, however late, and will especially be needed if there are any sales. If it is entered onto the brokerage account records before the account is terminated in 2011, the 1099's will be correct for this year.