My mother died in 2007. I did: Form 706 Federal estate taxes Form 1041 Federal estate income taxes Washington state estate taxes (no income taxes in Washington) for the year of her death.
Now (years later), I get a $612 check that is a prorated part of a class action settlement (I did not know about this until recently) for securities fraud related to a stock owned by my mother at the time of her death.
So, what do I need to do w.r.t. this money?
File an amended Form 706 since it could be considered part of her estate when she died?
File a 1041 for 2010 (next spring) since it is income to the estate? Is a legal settlement taxable? Does it matter that the money will be passed thru to the beneficiaries of the estate via Sch K-1?
Both?
If both, what deductions go on which form to avoid double taxtation?