Taxpayer is not an attorney and not knowledable of estate matters is the executor of 2 estates, both his aunt's and uncle's who were married to each other and died withing 2 years of each other. These estates remain open for several years and are still open becasue of issues relating to selling real estate. Taxpayer has been reporting the executor fees (2 separate 1099's) for several years now but has not been paying SE tax on the fees. IRS, for 2010, just sent a notice assessing the SE tax. I assume the IRS computer picked up a pattern of more than one estate and going on for several years. I don't feel the SE tax should apply. Any comments? Thanks.
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What type of notice? -
The 1099's probably had the amounts in box 7 so that is what caught IRS computer's attention.
Just reply to letter the facts in the case, that taxpayer functions as exeuctor as a favor to the estate and is not in that trade or business. performing for more than one estate does not condemn one to being in business.ChEAr$,
Harlan Lunsford, EA n LAComment
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The type of notice was a CP2000.Comment
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Thank you Chear, yes indeed the executor fees were reported on box 7 of the 1099-R. Sounds like a plan.Comment
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Agreed. The reason I asked about the type of notice is that the CP2000s are generated by the computers, and therefore easier to clear up. Anything else could mean more effort, though likely the same result.Comment
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They should have been box 3, not box 7. I had one of these where the trustee had two years of fees. It was easy to clean up with a letter; quoting the section of the pub describing trustee fees (or maybe it was the code, I can't remember) helped a lot.Comment
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Maybe it was Revenue Ruling 58-5?
"The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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Thank you for the comments and your help.Comment
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