Final form 1041

[Bird Legs]

Client dies 2/5/05. Residence goes into the estate and the estate sales it on 4/25/05
for $83,000. Will assume that the FMV at date of death is $83,000.
No gain or loss. However, by using the closing costs, ie. commissions, fees etc. as
selling expenses, this would create about a $3000. loss. Would this loss be deductible
by the beneficiaries on their personal return? 2005 is the first & final year for the estate.
Estate was closed in Sept. 2005.
2nd question: At the closing there was about $900. deducted from the selling price of the house to pay the real estate taxes from 1/1/05 to 4/25/05, date of sale.
Are these taxes deductible on page 1 of the 1041 as taxes paid?
All help is appreciated.

[Unregistered]

In the final year of a trust/estate return ALL income and deductions get distributed to the benefiaries. These items would flow through to them on the K1s.

[S T]

Closing Costs

selling expenses related to the sale of the decedent's personal residence can create a loss due to the step up basis. Expenses of selling the "estate" property are included in administration expenses if the sale is necessary to pay the decedent's debts, administration expenses, taxes or to preserve the estate, to generate the distribution of assets.

If the selling expenses qualify as administrative expenses, then include on the form 1041 administrative expenses not subject to 2% reduction. which could generate excess deductions on termination pass through to the beneficiaries.

If the selling expenses do not qualify as administrative expenses then report on Form 1041, schedule D, increase to basis which will then generate a capital loss, that can be passed through to the beneficiaries in the final year.

Property taxes would be an administration expense-taxes paid.

Bird, you might have excess deduction on termination, as well as capital loss to go on the beneficiary K-1 forms.

Sandy

[Bird Legs]

Sandy

you are a life saver. Thanks a bunch.