My son died in Nov 2012. Most of his earned income for 2012 was reported on a 2012 W-2 and included in his final 1040/540(Calif) tax returns.
However, his earned income for Nov 2012 was paid in Feb 2013. The payment went directly to his parents, the small-estate beneficiaries. (There was no formal probate court proceedings.) The earned income was not reported on a W-2 or 1099.
Should this be reported as taxable income?
If so, in whose name/SSN (my son's or his parents') and on what tax returns (1041/541 for the son's estate or 1040/540)?
My tentative conclusion is: it is not taxable income, either to my son or to his parents. But I am surprised by that conclusion.
PS: I know we can "get away with" not reporting any taxable income since there was no reporting of it to the IRS (e.g, W-2). But I'd like to do the right thing.