How do I avoid CP a couple of years from now

[JON]

The spouse died in August of 2018 and the information for their joint 2018 income tax return was just received. The attorneys have filed a 1041 for the year ended 12/31/18 and on each of the spouse's 1099s have written in the amount of interest income that they picked up on the 1041. All of the 1099s are in the spouse's social security number so how do I get the net taxable to the 1040 and not get a CP later because it will not match...???? or is there a way?

[Jiggers]

You list the total on Schedule B. Then do a nominee distribution on the same form. The net is what will be left on the Schedule B.

[Rapid Robert]

Issue a nominee 1099-INT, show the full amount on the decedent's return plus a negative adjustment for nominee amount. I think this is described in the form instructions (Schedule B and 1099-INT), search for "nominee".

[JON]

I have used the nominee before, but I do not think that would prevent the CP - I believe the computer matches totals only and then does the CP based on the total. I looked at the instructions to see if there was a change it mentions put a subtotal of your own on line 1 and then list the total nominee below that (with ID#s) as a subtraction and the combination of the two will go to line 2. With today's software I do not think you can get a subtotal, but you can get a subtraction. Still think it is tough to avoid the CP, although you can direct them to the calculation and presentation if you do that.

[Lion]

Do what Jiggers and Rapid say.

[Jiggers]

Do what Jiggers and Rapid say.

I don't issue a Nominee 1099INT. Never had a CP notice for unreported interest income.

[Rapid Robert]

I don't issue a Nominee 1099INT. .

That may be; but you are supposed to.

[JON]

Agree Robert, but that means a CP - totals are matched. The only way not to get the CP is not recording the minus for interest income on Schedule B, but for dividends or some types of interest with different categories that would be impossible. In this case the dividends are numerous, and involved. Again at least recording the nominee information on the Schedule B the CP response is sending them the complete information for the Schedule B.

[JON]

OK, Ultra Tax allowed me to have within the required schedules a listing of all dividends at 100% with a total and then a line NOMINEE distributions with a total-I had actually listed them separately on the input- and it subtracted the total. That is what the instructions says to do. I still do not know if that prevents a CP.

[Lion]

Read the article in NATP's TaxPro Monthly titled Decedent Returns, especially the sample Schedule B on page 6, for an easy to understand explanation of reporting Forms 1099 so they match the IRS computers while the final Form 1040 and the first Form 1041 are taxed on the appropriate amounts of interest/dividends/capital gains/losses.