Tax Law (Questions About Taxes)/deceased person's 1099

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Question
My wife's father died in 2011 and had several CD's in the bank. 1099's on those CD'were issued in his name/ssn and were included in his final federal tax return.  My wife was made executor of the estate. The probate documents were provided to the bank in September 2012 but one of her brother's didn't want to have his share of the money transfered to him because he was being sued by a business parter and wanted to "hide" that cash from a potential award should he lose the lawsuit.  My wife wasn't wanting to be confrontational so she let the issue sit despite my repeated warnings over the last several months that it needed to get done.  Now it is February 2013 and the bank has issued 1099's still in the name and SSN of the deceased father. So my question is two-fold.  First is, how does my wife, as executor of the estate, handle the 1099's with the IRS. Her father's final tax return was filed for 2011, the year he died.  The money in the CD's was not divided in 2011 so the bank will not "correct" them.  The second question is, assuming that it isn't illegal to keep the CD's in her deceased father's name, how long can this situation go on?  I keep telling my wife that she needs to tell her brother that like it or not he has to take his share of the estate or she's going to have serious trouble, but am I wrong?

Answer
David,

Thanks for your question.

Since the estate is closed and your father-in-law is listed as deceased the social security number on the 1099 is invalid. The bank will not likely re-issue the 1099, so the amounts should be reported on the tax returns of those who beneficially received the interest.  

This could cause an IRS inquiry (correspondence) but can be explained so it should not create any tax problems, just a little bit of hassle.

The estate should be settled, there could be consequences of her being an accessory to the brother hiding assets.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

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I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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