Estate Return, no filing requirements, IA wants to anyway

[DaveinTexas]

One last question

There was $5,000 to probate the estate, if we do file a return for the estate, will the deductions for these attorneys fees be deductible for the beneficiaries? The k-1 will show no income. Thanks! Apologies, I am an Estate return newbie, just want to get this right and I appreciate the sage advice.

[Golden Rocket]

Another New Wrinkle

...and at my age, I already have several.

This sounds an antithesis to the wisdom already plied forth, but there is a school of thought which thinks filing a 706 is a good
idea even if under the threshhold. Once it is filed the IRS has three years to contest the valuation of property. If they fail to do
this (and they usually do fail), then the stepped-up basis cannot be disallowed.

[Burke]

There was $5,000 to probate the estate, if we do file a return for the estate, will the deductions for these attorneys fees be deductible for the beneficiaries? The k-1 will show no income. Thanks! Apologies, I am an Estate return newbie, just want to get this right and I appreciate the sage advice.

Yes. A good reason to file a 1041 even though gross income does not require it. Assuming it is the FINAL return, those administrative expense deductions will pass through to the bene's on the K-1 (as well as any capital losses on the sale of assets). If all the assets can be disposed of by the end of the estate year (you can choose a fiscal year), then you can pass these two items through. That 1/3 interest in the real estate is weird. Did the deceased do that on purpose? And does the will give the right to sell it to the executor? What funds were used to pay the $5K?

[DaveinTexas]

Good thought

Yes. A good reason to file a 1041 even though gross income does not require it. Assuming it is the FINAL return, those administrative expense deductions will pass through to the bene's on the K-1 (as well as any capital losses on the sale of assets). If all the assets can be disposed of by the end of the estate year (you can choose a fiscal year), then you can pass these two items through. That 1/3 interest in the real estate is weird. Did the deceased do that on purpose? And does the will give the right to sell it to the executor? What funds were used to pay the $5K?

The estate will use a year end of April 30 of this year but this will not be the final year and there will be additional fees (payments to me) this year which will be the final year. The 1/3 interest in the property was the intent of the will, strange indeed. I think it has something to do with two of the beneficiaries (non family members---friends). Funds from the deceased taxpayer's husband's cancer policy. Husband died a few years ago but they just found out about his cancer policy recently.

[DaveinTexas]

I just realized

The attorneys fees won't carry to the beneficiary's K1 unless this were to be the final year return. I suppose we could close out the year because the Admin says there will be no further expenses/legal fees except mine and there is very little left in the bank account. I could choose not to charge I suppose, he has done many a favors for me. Thoughts?

[Burke]

The attorneys fees won't carry to the beneficiary's K1 unless this were to be the final year return. I suppose we could close out the year because the Admin says there will be no further expenses/legal fees except mine and there is very little left in the bank account. I could choose not to charge I suppose, he has done many a favors for me. Thoughts?

Don't waive your fee. The IRS will allow the executor to terminate the estate as of the end of the prior fiscal year, even if a reasonable amount of money is retained in the bank account to take care of bills which have not yet been submitted for payment. Give Admin an invoice now and let him pay even if you have not yet completed the returns. I do this all the time. Exec paid me in March to close out an estate and submit the accounting, and I am still waiting for info to do final year 1041 (2013.) What about the 1/3 interest in real estate? Has that been taken care of? BTW, if there is an actual loss on sale of personal vehicle, it is a cap loss to the estate and deductible.

[DaveinTexas]

Excellent!

Don't waive your fee. The IRS will allow the executor to terminate the estate as of the end of the prior fiscal year, even if a reasonable amount of money is retained in the bank account to take care of bills which have not yet been submitted for payment. Give Admin an invoice now and let him pay even if you have not yet completed the returns. I do this all the time. Exec paid me in March to close out an estate and submit the accounting, and I am still waiting for info to do final year 1041 (2013.) What about the 1/3 interest in real estate? Has that been taken care of? BTW, if there is an actual loss on sale of personal vehicle, it is a cap loss to the estate and deductible.

I thought I read somewhere what you wrote in your response somewhere, it just seems reasonable. The 1/3 interest in real estate is held, as it turns out, in the beneficiary's names (title transferred properly apparently). I wasn't aware of the deductibility on the loss on the personal vehicle.

Geez Burke, you should send me a bill for your assistance sir!! Thanks again!

[taxea]

I would file to document information