Taxpayer, cash basis farmer got married in 2012; passed away suddenly in Feb 2013 from aggressive cancer. No income taxes due till 04/15/13 (extended due to IRS exception this year)-more than 2/3 of the gross income was from farming. Taxpayer had $200,000 of grain held over from 2012 harvest that will be sold in 2013. Widow was not active in farming operations.
Several questions arise:
1. Is the unsold grain considered income in respect of decedent? Or an asset in the estate that would get a step-up in basis and thus little or no gain to be reported when sold in 2013?
Per my reading of TTB 21-8 the unsold grain should not be considered IRD.
Assuming that the grain is included in the estate at FMV at date of death, then basis would be stepped –up to date of death value.
2. Could the 2013 return be filed and estimated tax paid under the estimated tax payment rules for farmers? ie no payments due till the return is files 03/01/14?
Since that taxpayer qualified for the estimated tax penalty exception for 2012, he would automatically qualify for 2013 TTB15-4 on the MFJ return.
Those are my thoughts. Would you handle differently?
Several questions arise:
1. Is the unsold grain considered income in respect of decedent? Or an asset in the estate that would get a step-up in basis and thus little or no gain to be reported when sold in 2013?
Per my reading of TTB 21-8 the unsold grain should not be considered IRD.
Assuming that the grain is included in the estate at FMV at date of death, then basis would be stepped –up to date of death value.
2. Could the 2013 return be filed and estimated tax paid under the estimated tax payment rules for farmers? ie no payments due till the return is files 03/01/14?
Since that taxpayer qualified for the estimated tax penalty exception for 2012, he would automatically qualify for 2013 TTB15-4 on the MFJ return.
Those are my thoughts. Would you handle differently?