Nominee reporting

[espurlin]

Decedent's personal representative sold stock two months after decedent's death, and the 1099-B for over $180k of proceeds was reported to the decedent's SSN because the personal representative did not move it to an estate account first.  I'm filing a 1041 to report everything on the 1099-B and am reporting the date of death value as the basis (even though it differs from the 1099-B because there was no step up because it was never transferred to an estate account).   I'm told I also need to report it on the 1040 since there is a 1099-B to the SSN.  I understand this is nominee reporting, but I don't understand how to do it in ProConnect.  Can anyone point me to any information as to how to do nominee reporting from a 1099-B for a decedent?  Thank you. 

[IRonMaN]

You don't need to report it on the 1040.  Just report it where it belongs.  I usually attach a note to both returns explaining where things are reported.  I don't know that an IRS dude or dudess has ever read my notes, but it always makes me feel better.

[chasetax]

Form 8275-Disclosure statement could also be used to properly notify IRS of your issues.  In the past I used e-filing preparer notes but they were ignored-too many CP2000's had to be answered by me after filing and then copying my preparer notes and mailing to IRS.

[BobKamman]

Form 8275 notifies IRS that you did something wrong but there's a reason a penalty should not be assessed.  It should not be used as a square peg to pound into a round hole, even though IRS fails to provide round pegs.  @IRonMaN has the logical solution:  Just attach an explanation. If a CP-2000 is issued, just reply with a copy of the explanation, for the cost of a stamp and envelope.  

Attaching a statement is consistent with the IRS Schedule D instructions, on nominee distributions of capital gain distributions:

If you received capital gain distributions as a nominee (that is, they were paid to you but actually belong to someone else), report on Schedule D, line 13, only the amount that belongs to you. Attach a statement showing the full amount you received and the amount you received as a nominee. See the Instructions for Schedule B to learn about the requirement for you to file Forms 1099-DIV and 1096.

Technically, the personal representative is probably required to file a 1099-B showing the nominee distribution of the stock sales, but I doubt many people do that.  

[sjrcpa]

I don't even do that (attach a statement ). I report on 1040 what is the decedent's and on the 1041 what is the estate's. Never had any matching notices from IRS. Been doing it that way for years. Somehow, in year of death they must skip that.

On the other hand, now that they are sending checks to dead people, who knows?

[BobKamman]

Same here.  The more I think about it, I think the "correct" answer is also the "silly" answer:  File a 1099-B for the nominee distribution.  They must check to see if nominee distributions have been reported, right?  Especially with people who are still alive?  Has anyone received a CP-2000 for income properly passed on with a 1099 nominee distribution? 

On second thought, has anyone seen a CP-2000 for any reason in the last couple months?  I'm sure they'll be back eventually, but probably with a $25,000 tax threshold for a while.  

[sjrcpa]

I had a client get a CP2000 in March, for 2018. She is alive.

[BobKamman]

@sjrcpa 

Must have been the first couple weeks of March.  That will be fun to deal with, unless you just agree and send a check.  Let us know next year how it turns out. 

[sjrcpa]

We partially agree and partially disagree.

It is dated March 16, 2020.