Inherited income

[Earl]

Have taxpayer who was on JTWROS with her mother and sister in investment account. All funds put into account were from mother. Mother died in May and the two sisters inherited the accounts.

Account was with a broker and invested in varioius stocks, bonds mutual funds. The total fund was liquidated and split between the sisters on 50/50 basis.

The problem lies with the 1099int, 1099div and 1099B which were issued in taxpayers name for the full amounts.

How would any of you go about splitting this between the sisters so that one is not stuck with all the taxes. I understand about nominee interest and nominee dividends. However, is it required that taxpayer furnish her sister with nominee 1099's as IRS states or is it sufficient to just insert the information on Schedule B.

What about the gains from 1099B. How would you input it on Schedule D to show a split of the gains or losses. There was a 4 month lag between mother's death and sale of the assets in account.

[jainen]

The simplest thing

>>splitting this between the sisters so that one is not stuck with all the taxes<<

The simplest thing is to pay the tax the way it was reported, and the other sister reimburse her.

>>How would you input it on Schedule D to show a split of the gains or losses<<

Fortunately with stocks it is easy to determine the value on any given day. Determine the FMV on date of death, and report half of that as basis on each sister's return.

[Earl]

Schedule D

The 1099B in one sisters name will show entire sale proceeds. How can I put it on Schedule D so it matches IRS information and still split between sisters.

[jainen]

generate new IRS information

>>How can I put it on Schedule D so it matches IRS information and still split between sisters<<

You can't, unless you generate new IRS information with additional 1099's or at least annotating the tax return. But you can simply use what you have, report it all on one sister's return, and have the other party pay back her half directly to the reporting sister.

[John of PA]

OR.....(Hi Jainen)...........

Or put the full amount on the Sch D, then on another line on the Sch D. subtract back out 1/2 (enter 1/2 as cost basis only titled "1/2 to sister". Will get through the IRS 1099 matching program, and everything is reported correctly.

[Davc]

Fortunately with stocks it is easy to determine the value on any given day. Determine the FMV on date of death, and report half of that as basis on each sister's return.

DOD FMV is the average of the high and the low if the markets were open. If not, see the 706 instructions.