I am working on a person’s final 1040. He passed away in late 2006. He had set up a living trust with his son as the successor trustee. In 2005, decedent had a physical injury which required him to be in an assisted care facility until his death. To pay for this care, it was required to draw from an annuity which was part of the living trust. The 1099R from the annuity has the full draw amount as the taxable amount in box 2 and box 7 has a code of 7. (At this point in time, the decedent’s son is checking with the annuity to see if all is correct on the 1099 as he thinks that at the time the decedent began the annuity, he paid for it with taxed income) The decedent had SSA income, and some 1099R income along with the annuity draw on a 1099R. The $36,000 draw on the annuity for his health care put his income at a level that the estate has a balance due the IRS of $1,351. Pending any information the son obtains from the annuity, which may change directions, I itemized the return and deducted the $36,000 as medical expense. Am I going about this correctly, or am I off base? Any help or suggestions will be very much appreciated.
Thank You.
Thank You.