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Final 1041, what happens afterwards?

Shorebird
Level 3

The Final return is filed and the Administrator of the Estate pays the beneficiaries.

The IRS decides to audit the return afterwards.  What happens?  Are there any 

steps that can be taken to protect the Administrator if more taxes are assessed?

So they don't get stuck with the expense.  

Are there any steps that can be taken to protect him/her?  

I have not been able to find anything in the 1041 Instructions or the Publications

and would appreciate some help.

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1 Solution

Accepted Solutions
BobKamman
Level 14

See Code Section 6501(d), and Form 4810. The estate can request a “prompt assessment,” which means IRS has only 18 months to act. This can be done before the estate is closed; the estate should wait for IRS to respond (sometimes they will do it sooner, at least in normal times). I’m not sure how often this procedure is used, because some may be concerned that it will lead IRS to wonder what they are worried about. Also, 18 months is still a long time to wait, although in many cases distributions can be made except for an amount estimated to cover any proposed taxes.

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7 Replies 7
BobKamman
Level 14

See Code Section 6501(d), and Form 4810. The estate can request a “prompt assessment,” which means IRS has only 18 months to act. This can be done before the estate is closed; the estate should wait for IRS to respond (sometimes they will do it sooner, at least in normal times). I’m not sure how often this procedure is used, because some may be concerned that it will lead IRS to wonder what they are worried about. Also, 18 months is still a long time to wait, although in many cases distributions can be made except for an amount estimated to cover any proposed taxes.

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sjrcpa
Level 15

I think I heard IRS is about to institute fees for estate closing letters.

 


ex-AllStar
Shorebird
Level 3

I heard that was for the Closing Agreement letter from the IRS - the fee, I mean

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sjrcpa
Level 15

IRS can go to the beneficiaries who received estate assets to collect.

Sometimes, I have heard 😏, the PR will hold onto some cash in a noninterest bearing account for this contingency.


ex-AllStar
Shorebird
Level 3

I was wondering if, after an audit with a finding of more taxes and penalties owed would the Representative be solely responsible. 

This was a 'messy' situation and all the siblings fighting with each other, etc.  No returns had been filed since the decedent's death in 2013.

Where did you see the IRS can get money from the beneficiaries?

Thanks for your help.

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BobKamman
Level 14
Shorebird
Level 3

Thank you so much for the link.

That's exactly what I needed.

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