Thanks to all for chiming in. I called my CPA and he explained to me that he would rather do a first and final in one shot that includes the sale of the house. That would do it all with one form and I'm done. For my situation there is no reason to establish a placeholder or whatever in some cases he does send in 1041 with zero's. The form is assuming 1-15-09 based on the date the EIN was issued. He assured me I won't get notices(yeah famous last words :) ), etc. and if I do the response would no income for 2007. Just for the sake of the thread and those that do searches that might have this same question about the form and the wording. Let me first remind that the reason for the post was the wording on the form "based on this request you must file form 1041 by "1-15-09" even though form 1041 specifically states to file the form if income of 600.00 or more. When the property was sold no 1099-S was issued so I have no knowledge of any 1099's out there as of now anyway. BTW - There was no gain on the property as the appraisal, and sale price are equal.
Ed - thanks for the concern but most of the money WAS distributed, so there's a few bucks in there just in case the surrogate court has questions and to pay my final Lawyer and accounting fee's(However I'm going to move the money and close the acct ASAP).
Please note Surrogate courts are slow and so is my Lawyer. Here in NYS the estate(not estate account) must stay open for 7 months. My dad doesn't want the money so the lawyer had to file renounciation of his interest so I would get the dough. Then out of the blue I recieved notification of a workers comp case that was out there(we had no idea, my sister never told us about this), and a settlement was forthecomming. So.. We had to get approval of the court for me to accept the settlement (around 25 grand). That kept it going till I recieved the check in Nov. Finally, my lawyer is now going to file to close the estate and relieve me of my duties as administrator and hopefully that goes fast and smooth so I can be done with this. You know losing a sister and having to deal with these things doesn't make for happy times. My interest is to close the estate, satisfy the IRS and go on with my life. My dad and I just want closure. I'm sure anyone that has had to go through this can relate.
Thanks again for the responses, I learned a lot from you all and I thank you for that.