I have a client I am to see that normally does their own taxes on turbotax but they've had a death of Spouse's Dad and are overwhelmed. Dad hadn't been required to file a return in more than ten years because he was living on nothing but his social security check. They are therefore satisfied that he does not need a Final Return. They are satisfied that no F 706 is necessary because of the value of the estate. They believe however, that his Estate is required to file a F 1041 and since they could not make heads or tails of it they filed for an extension. My phone notes do not mention the number of the form they used, but they were helped by a lady at the IRS so it is possible that they filled out the right form. I'm not sure whether Dad had a will or whether there are other heirs. The only things the man owned when he died were his home and its contents. Some contents were distributed to heirs, some were given away, and some were sold at yard sale prices. Records of all this were kept. The house was sold for slightly less than the man paid for it 20 or so years ago because while it was still savable, it had deteriorated during his life and needed major work.. We can document the state of disrepair because the sales disclosures were pretty complete and were based on repair estimates the family still has. I believe that his daughter used the little bit of money he had at death plus the money from selling some of his stuff to repay the Social Security Administration for his last check.
Now I've got to confess that I am scrambling to catch up on Trusts by reading in the IRS Pubs. I hadn't thought about Estates since my EA Exam in 1997. At that time I thought I wanted to stay with that employer forever and remain in the sort of office where such returns are not prepared. I have agreed to meet with them and look over their stuff only because this one seems pretty simple and because I am excited by the challenge.
1. Is anything they have told me likely to be wrong?
2. How, if at all, do I report the yard sale type sales? I'm inclined to say it can be ignored just as would be the case if he had sold them in his lifetime and not been in the business of holding yard sales.
3. How, if at all, do I report money and property given to heirs? Note that I am talking about report to the IRS and NCDOR. I know that there has been or will be a report to the county clerk of court but this is not my responsibility.
4. In this scenario, what is there to pass through to the K1? I am under the impression that a loss on a personal residence would be nondeductible and that there is nothing about a death that would change the character of this loss.
5. I'm an EA and I can read and follow IRS instructions and I don't mind putting in far more hours than this case is worth financially. But if anyone wants to recommend that I not take on the case I will attend to what you have to say. The reasons I am willing to take it are that it looks relatively simple so far, I look forward to learning about Estates, and the couple are friends of mine who will willingly pay me a nice sum of money.
Now I've got to confess that I am scrambling to catch up on Trusts by reading in the IRS Pubs. I hadn't thought about Estates since my EA Exam in 1997. At that time I thought I wanted to stay with that employer forever and remain in the sort of office where such returns are not prepared. I have agreed to meet with them and look over their stuff only because this one seems pretty simple and because I am excited by the challenge.
1. Is anything they have told me likely to be wrong?
2. How, if at all, do I report the yard sale type sales? I'm inclined to say it can be ignored just as would be the case if he had sold them in his lifetime and not been in the business of holding yard sales.
3. How, if at all, do I report money and property given to heirs? Note that I am talking about report to the IRS and NCDOR. I know that there has been or will be a report to the county clerk of court but this is not my responsibility.
4. In this scenario, what is there to pass through to the K1? I am under the impression that a loss on a personal residence would be nondeductible and that there is nothing about a death that would change the character of this loss.
5. I'm an EA and I can read and follow IRS instructions and I don't mind putting in far more hours than this case is worth financially. But if anyone wants to recommend that I not take on the case I will attend to what you have to say. The reasons I am willing to take it are that it looks relatively simple so far, I look forward to learning about Estates, and the couple are friends of mine who will willingly pay me a nice sum of money.
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