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Tax Law (Questions About Taxes)/Estate and Transfer on Death account income

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Mom died in Nov 2011 leaving 4 beneficiaries. I was one of them, executor too and used an estate attorney to open estate and an accountant. Turns out most of the gross estate was titled TOD. I contacted these accts and they were distributed to beneficiaries.(A gross estate less than $5,000,000 wouldn't have to file federal estate return,right?) The rest the lawyer handled-- car, house, some smaller bank accts. Total that went into estate EIN was $175000 and included the house (~$115000 and sold at a loss). The accountant filed a final 1040 in 2011 for Mom. It included ALL 1099s etc from ALL of 2011. The estate was closed Dec 2012 and all estate assets remaining were distributed. Now I am receiving 1099s in Mom's social security number for dividends/interest and gross proceeds from TOD brokerage acct, mutual funds etc for period of 2012( after death) but BEFORE these were distributed to her beneficiaries. Called the accountant and she told me that the beneficiaries include 1/4 of these amounts on their 2012 1040.! Also, because the 'lawyer handled estate' (probated?) didn't make $600 she doesn't have to file an estate return. I am not sure what to do. As executor I am afraid any mistakes will come back to get me personally. Like not filing proper returns, even though I don't know what is required.For some reason, I don't think the accountant is right. What do I do with these 1099s in Mom's ss # for 2012 and the K1 in her ss # for 2012? Are these considered 'income' to her estate even though they didn't go through probate and have her EIN? The only taxes paid to date were Mom's 2011 final 1040. Her beneficaries are paying taxes on the gain from stepped up basis on date of death to time they sold TOD assets. I am aware that there would be no tax on inherited assets. Sorry for the long post. Any help would be greatly appreciated. Thank you!

Answer
Karen,

Thanks for your question.

What the accountant told you is pretty much correct. 1. With under $600 in income, no estate income tax return is necessary. 2. The income from the various sources should be allocated to the respective beneficiaries. Keep a record of that and who should have paid the tax on them. Just in case the IRS comes knocking.  They are income to the estate, but is being passed on the the beneficiaries.

Hope this helps.

John Stancil, CPA  

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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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