rbynaker
Level 13

For 8949/Sch D, I would take Lisa's approach and adjust the gain rather than paper filing.  I would also attach a detailed statement to the return something like "The following items were incorrectly reported under the SSN of Taxpayer but were received after the date of death.  They have been properly reported on the tax return of XXX:"  So either a cost with no sales price or a sales price with no cost.  Also remember that stocks sold after date of death should have a step in basis (up or down to FMV) so the basis amounts reported on the 1099-B may not be correct.

For DIVs, I do the nominee thing but the trick with ProSeries is that there's just one nominee box so you have to split out the non-qual divs, qual divs, CGD, muni-interest, FTC, etc. onto different lines for the nominee math to work correctly.

Keep in mind that with divs, the IRS is just getting a Schedule B from the taxpayer.  The detailed entries for everything else are provided by the software to make data entry easier on us.  Sch B only reports total divs, there are no details reported regarding qualified, CGD, etc.  All of that stuff is totaled and reported on the appropriate lines of the 1040 (or Sch D, 1116, etc.)  So if you're backing out the estate portion of divs you just need one line for that so that it prints on Sch B.  I would just manually reduce the amount of qual divs to the correct number for the taxpayer such that the correct total shows up on the 1040 and on the Sch D worksheet for calculating capital gains tax.

So two approaches to get to the same end result.  Either way, I attach the detailed statement to try to head off IRS inquiries.

I've been told by someone in the AUR unit at IRS that every CP-2000 notice is reviewed by a human before it goes out.  I have in at least one instance copied the statement attached to the filed return and pasted it into a CP-2000 response letter that starts out "As described in the statement attached to the return <paste>."  Then a human gets it, reads it, marks the return as no change and we all move on with our lives.

Rick