Clients wife died in 2013 all assets passed by beneficiary or in both names except house in her name only. Client never changes title to house till he goes to refinance in 2016. Than changes deed and refinances in his name. The old mortgage company issues refund of escrow $2936 in wife's name. He gets EIN# and opens an estate account to deposit check. IRS now wants 1041's for 2013,2014,2015, and 2016. Do they have to be done? There was no income in any of those years.
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Some response is needed
Yes, IRS now knows there has not been a return filed. The filing requirement begins on day of death and does not depend on when a beneficiary decides to do something to perfect his interest. And remember an estate has a fiscal year and not a calendar year.
I think a response is needed. It is quite possible that the filing requirements for the first 2-3 fiscal years were not met, and if this is the truth, respond accordingly to the IRS. Be sure there was no REPORTABLE revenue. Just because the beneficiary says there wasn't any income doesn't means he understands that the requirement centers around reportable revenue, even though he thinks it was a "wash." -
A decedent's estate "may" choose a fiscal year, but this one can not. Must be done on the estate's timely-filed initial return.Originally posted by Snaggletooth
If all the assets were promptly distributed, except for changing the title to the house, there may not have been any taxable income to report on a F-1041 in any year. The check from he title company represents a refund, not taxable income. A simple letter to the IRS may be sufficient to put the whole matter to bed.Roland Slugg
"I do what I can."Comment
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1041 needed
Thanks for the answers I will write a letter Wednesday and see what happens.Comment
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Roland - I'm not saying you are wrong but I'm interested in where there is authority that says the return must be timely. I've seen practitioners argue both sides of this issue based on the regulations for §441. I grant you - I've snipped but one sentence from §1.441-1(c) but I find nothing about being timely. Would appreciate your input.Originally posted by Roland Slugg View Post
A taxable year of a new taxpayer is adopted by filing its first Federal income tax return using that taxable year.Comment
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I think it would be classified as "timely" the first year it would have been required. If no income, then no requirement to file.Comment
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Somewhere in the deep recesses of my memory I seem to recall that in order to adopt a fiscal year a timely-filed return was necessary. However, I can not find such a requirement at this time. Perhaps that requirement was repealed, or maybe my recollection was faulty.
What I can find is Regs §1.141-1(b)(1)(iv) which say this:
I'm pretty sure that any taxpayer that has not filed a return for several years would be hard pressed to show that he was keeping "books" at all, and certainly not on a fiscal year basis.Except as provided in paragraphs (b)(1)(i) and (ii) of this section, the calendar year, if the taxpayer keeps no books, does not have an annual accounting period, or has an annual accounting period that does not qualify as a fiscal year.
In the case at hand, the question is probably moot, as there may never have been a requirement to file a tax return for this estate at all.
I thank NYEA for questioning my earlier post about this issue.Roland Slugg
"I do what I can."Comment
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