Simple estate: Is 1041 filing is required.

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Simple estate: Is 1041 filing is required.

Post by DelcoEE » Thu Aug 16, 2018 10:23 am

I am helping a family friend (executor) settle a simple estate and we are trying to figure out if a 1041 filing is required.
Here are the facts.

• No probate property.
• All decedent assets were in CDs and Vanguard GNMA. All have named beneficiaries.
• Date of death was 7-25-17 and all assets were distributed by 10-15-17 except for a small amount set aside in an estate account with EIN in good faith for contingent liabilities. The account is still open as of today.
• Final 2017 tax return of decedent was completed and included all 1099 income that was generated before transfer to beneficiaries.
• All beneficiaries (transferees ) included any income generated from inherited assets (after transfer) in their 2017 tax returns (income from time of transfer to end of 2017)

In short, the estate assets did not generate any income between time of death and transfer other than interest and dividends. All that 1099 income was included in the 2017 returns.

Does the income generated from the CDs and Vanguard GNMA between date of death and transfer to beneficiaries have to be declared on 1041? I don’t think so because I don think it is characterized as IRD (income in respect of death) since it was included in decedent final return.

My friend is worried because the IRS sent him a notice after he opened the estate account stating he MUST file a form 1041 by October 2018. Could a mistake have been made filing for the estate account?

Thanks in advance for your feed back

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