What would you do?

[NotEasy]

Parent passed away in 2010. Two daughters do not get along with each other. Younger sister handled a rental property and only she knows the income and expense information. Elder daughter is appointed to handle the tax matter. Now elder sister needs younger sister to give the tax information for filing the fiduciary tax return but looks like younger sister is not going to cooperate.

What would you do under the situation? I think some of the expense items, like property tax, can be found online. And other expense items like the HOA fees can be obtained by calling the Home association. Would you suggest your client to do a good faith estimation of the rental income and go ahead to file the tax return? Or is there a better way to handle it?

Thank you for your advice.

[Uncle Sam]

You've left more questions unanswered than given information to answer you.,

First - are you talking about a 1040 or 1041? Or both? For a 1041
what fiscal period (if not a full 12 month period) is involved?

Second - Whether they get along with each other or not, an accurate return
needs to get filed - looks like an attorney has to step in and provide advice that
both of them are going to have problems if they don't cooperate with each other.

A court can subpeana bank records to get that information so the younger sister
should cooperate anyway.

If this is going to flow into estate filing issues - both sisters will lose out if they
don't provide accurate information now.

[Gary2]

Elder daughter is appointed to handle the tax matter.

Was any sort of court document appointing her issued by the appropriate court? If so, any chance that that document alone would be enough for the banks to release copies of the account records?

[taxea]

What were the circumstances surrounding the younger handling of the rental. Who was the agreement made with? What are the details of the agreement? Was she handling the rental before the passing of the parent/s or since? I agree that the older should or may have to get what is needed through an attorney. Perhaps just an explanation of the law on an atty's letterhead may be sufficient to get younger to cooperate. Sounds like there may be some theft of funds involved. I can't imagine any other reason why she would not want to provide the information.

[kpangelinan]

Yup, lawyer probably needs to get involved......not a good set up, but regardless, a proper and accurate return needs to be filed.

[Jiggers]

Yes. Let the lawyers hash this out. But I would advise both parties that the lawyers will be receiving their inheritance instead of them.

[kpangelinan]

Yes. Let the lawyers hash this out. But I would advise both parties that the lawyers will be receiving their inheritance instead of them.

Good point.....I have an actual case of this happening between two sisters, one of which is my client. Bad deal.

[Gary2]

Referring it to the lawyers may or may not solve the problem that at least one return is due in a month and a half (the final 1040), while it's unclear when the 1041 and possibly 706 will be due.

At a minimum:

1. If automatic extensions are still available for the latter two, I'd suggest filing them.
2. If a court appointment hasn't been received yet, make that a priority with the attorney.
3. If a court appointment has been received, see how far that will take things on its own, with regard to getting records from banks as well as current and back tax records for the parent from the IRS and any states.

For all three returns, there's a trade-off between late filing penalties and filing using good faith estimates (along with a statement that that's what they are). I'd do some research into exactly what those trade offs might be.