1041 Sale of decedents home

[Art]

Is there any reporting on the 1041 (fiduciary income tax return for the estate) for the sale of decedent's home? Executor will be filing a 1099 to report each beneficiary's share of the sale proceeds. Assume the step-up in basis at date of death would eliminate any gain on the sale. Thanks for your input

[veritas]

If as you say

the executor is preparing a 1099s for each beneficiary I might assume the estate no longer owns the home.

[Art]

Yes, the estate sold the home and distributed the proceeds to the beneficiaries rahter than distributing title to the home to the beneficiaries and having them sell the home. My question was since the estate sold the home, does the transaction have to be reported on the 1041 fiduciary return for the estate? and if so is there no gain to report becasue of the stepup in basis rule?

[Bees Knees]

The home sale must be reported on the 1041. However, the estate gets step up of basis to FMV at the time of death, so there should be no gain to report on the transaction, unless the FMV increased between the time of death and the date of sale.

[veritas]

Since the estate

owned the home, why is the executor preparing 1099's?

[Art]

Yes, I see your point. If the sale is reported on the 1041, then there would be no 1099 to file. The house was sold within 3 months of the date of death so the was no increase in FMV and no gain. Thanks for all your help.

[OtisMozzetti]

Sale of Decedent's Home

In many instances, the estate might likely sell the decedent's home at a LOSS compared with the stepped-up basis when the decedent died (or on the alternate valuation date). If the estate gets closed, it can pass excess deductions or LOSS through to the beneficiaries via Schedules K-1.

[S T]

Revisited

Okay, I just so happen to have this situation that arrived on Monday.

Decedent died 10/26/06 still owinng personal residence. Daughter (only beneficiary of estate) sold the residence 3/2/07 and received the proceeds. No other estate issues.

Daughter had to file for EIN # for estate and IRS is looking for a return, which is now late.

Daughter obtained probate appraisal of property at $575,000, sold property for $585,000, cost of sale, etc are $59,553, so loss on property of $69,553.

Is it possible that the daughter can receive the pass through of this loss on the decedents personal residence. Sales was within 6 months of decedent's death. Doesn't seem likely that the loss can be claimed.

Any wisdom on this issue.

Thanks,

Sandy

[Gene V]

Sandy,
If I understand the question right, she can take the loss, looks like she inherited the house and did not use the house as her personal residents. Using your numbers, the loss should be $49,553, not $69,553.

Daughter obtained probate appraisal of property at $575,000, sold property for $585,000, cost of sale, etc are $59,553, so loss on property of $69,553.

[S T]

Correct Numbers

Yes Gene you are right, I am just too tired and my eyes and brain are not working! Helps if I use the right figures appraisal versus sale to calculate the loss. Had it right in the computer, but transposed on posting. That happens so often to me!

Loss is $49,553

No the home was not used as a personal residence by the beneficiary for the period from date of death of decedent to sale date.

So is it confirmed the loss can be passed onto the beneficiary through the K-1 form 1041. My software has a toggle to generate that the property was in fact a personal residence and the loss is disallowed. And then I have also read other posts that state that maybe yes/maybe no.

I would appreciate more wisdom on this issue.

Thanks

Sandy

[newbie]

I apologize in advance if this is a stupid question, but her goes......Does a 1041 always have to be filed when property inherited?

I have a client that has inherited a home and some stocks & mutual funds in 2008 and am not sure if a 1041 needs to be filed. Can't the sale of items after death of relative go on the bene's personal return?

[erchess]

See TTB SB-10

for a good basic discussion including where to go for further information.

[dwert]

Sandy - Get Creative

Sandy, You stated that client had to get EIN for estate and it is now late. Maybe not. Estate can choose any month year end up to 12 months after death. Date of death was 10/26/06 and you are thinking year end was 09/30/07. What if you make the first tax a short year end ending February 2007 and it probably didn't have $600.00 in income. So no requirement to file. Second tax year is March 2007 to February 2008 with a due date of June 15, 2008 (not late) The sale of the house gets reported in this estate tax year and in beneficiary's 2008 tax year, therefore no amended return for her either.