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Another year end issue

I lost my brother in Nov 2014. An estate was opened and closed before the end of the year but no estate income was generated during that time. There was, however, a small brokerage account involved and it was 2015 by the time it was dispersed to the heirs. Meanwhile, it generated some 2015 income before it was dispersed. So now we have a

2015 1099 in the name of my brother's estate but that income legally belonged to the heirs. The estate had been closed the prior year. Will there be a problem if the heirs just tack the income onto their respective 2015 1040's? Total is about $3,000 dividend income split two ways.
Reply to
PortStG
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Probably the best way (least likely to avoid audits) to report it would to file a final (and, I mean, _really_ final) 2015 income tax return for the estate. Alternatively, you might have "the estate" issue nominee 1099-DIVs to the beneficiaries.

The net effect is as if it was done as you suggest, but the IRS might eventually track the income to the estate's EIN, and someone will have to explain what happened. You don't want that someone to be you....

-- Arthur L. Rubin, CRTP, AFSP Brea, CA

Reply to
Arthur Rubin

Probably the best way (least likely to avoid audits) to report it would to file a final (and, I mean, _really_ final) 2015 income tax return for the estate. Alternatively, you might have "the estate" issue nominee 1099-DIVs to the beneficiaries.

The net effect is as if it was done as you suggest, but the IRS might eventually track the income to the estate's EIN, and someone will have to explain what happened. You don't want that someone to be you.... ========== Why WOULDN'T one have an estate income tax return (1041) in there for income during administration? Even if it's just to take advantage of the estate's $600 exemption, therefore distributing at least $300 less taxable income to the two beneficiaries....

Reply to
D. Stussy

Good point. It seems clear the estate WAS NOT closed the prior year, as it still had assets not distributed to heirs or to an administrative trust.

Reply to
taxed and spent

"D. Stussy" wrote

Not really concerned about an audit or explanations except for the possible time wasted. But the "really_ final" option seems as hassle free as any other. Thanks guys.

Reply to
PortStG

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