In case of a decedent, if the heirs quickly divide the estate, and there is no appreciable income during the existence of the estate, I don't file an SS-4 and worry the IRS or anyone else about opening up an estate tax #.
On July 5th, Mr. Ellis died, with about $10,000 in cash, 140 acres of land, and a fully-depreciated tractor with attachments worth about $5,000. The heirs have already split the cash, have surveyed and a splitting the land, and have sold the tractor for $5,000.
Normally, I see no reason to open up an estate FEIN #. Simply add maybe $20 in interest onto his Schedule B, and put everything on the 1040, including a 4797 for the sale of the tractor. (split between capital gains and depreciation recapture).
However, the capital gains rate on his 1040 will be 0%. Technically it was all passed through to the heirs, and ALL of them are in a tax bracket of 25% or higher. Without a 1041 and K-1 to the heirs, there is no way to pass the income to the heirs so that the proper capital gains rate will apply.
Are we stuck with having to open a FEIN# for this short-lived estate, or is there a simpler way?
[Please, no lectures about me wanting to take short-cuts. Even the IRS doesn't like to open accounts and process returns when they are useless]
On July 5th, Mr. Ellis died, with about $10,000 in cash, 140 acres of land, and a fully-depreciated tractor with attachments worth about $5,000. The heirs have already split the cash, have surveyed and a splitting the land, and have sold the tractor for $5,000.
Normally, I see no reason to open up an estate FEIN #. Simply add maybe $20 in interest onto his Schedule B, and put everything on the 1040, including a 4797 for the sale of the tractor. (split between capital gains and depreciation recapture).
However, the capital gains rate on his 1040 will be 0%. Technically it was all passed through to the heirs, and ALL of them are in a tax bracket of 25% or higher. Without a 1041 and K-1 to the heirs, there is no way to pass the income to the heirs so that the proper capital gains rate will apply.
Are we stuck with having to open a FEIN# for this short-lived estate, or is there a simpler way?
[Please, no lectures about me wanting to take short-cuts. Even the IRS doesn't like to open accounts and process returns when they are useless]
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