Death of taxpayer with a Sch C

[Bonnie]

I received an email from a customer who has filed MFJ since I have been preparing their tax returns telling me her husband died in May. Wife's only income is her retirement on a 1099R. Husband had a trucking business and he filed a Sch C for his income. She tells me she is continuing to run the business as usual as if husband is still alive with contract labor driving the trucks. She thinks because they filed a joint return that she can just file the Sch C as if he is still running the business. I know that's not possible. I'm at a loss of what to tell her. I'm thinking Sch C in his name thru May with income and expenses and then Sch C in her name from May on. What advice do you have for me in handling this situation

[ATSMAN]

Not on a Sch C but Sch F I had a similar situation few years back. Married couple always filed MFJ. Husband the farmer died mid year, wife continued with farming activities as if nothing happened. I filed 2 Sch F. One for the period husband was alive with is SS# and the other with the wife's ss# after his death. Had to allocate income and expenses accordingly.

[BOB W]

And don't forget transfer of ownership of trucks and the like property as well as other business registrations, TMT for one.

[Jiggers]

You also get a step-up in basis for all equipment, buildings, and any other assets.