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Is a 1041 required?

Camp1040
Level 8

Descendant wills assets (House, Car) to daughter. Daughter sells home but the 1099-S form is issued in her name and SSN and not the estate name and EIN. Also, the closing documents list the daughter as the seller and not the estate. My position for filing the 1041 is that the sale does not get reported on the 1041 but on the heirs 1040 with a stepped-up basis and a 1099-S to match.

The attorney handling the estate wants the sale reported on the 1041 and my position is I will file an initial and final zero 1041 to close out the estate but I will show the sale of the home following the 1099-S trail which is the heirs 1040.

On average I prepare 1.5, 1041 returns per year. So to say the least I’m looking for some reassurance on my position; the estate did not earn over $600 and the asset was sold outside of the estate. My question, is the 1041, reporting the home sale necessary?


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sjrcpa
Level 15

My question, is the 1041, reporting the home sale necessary?  Based on your facts, no.


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3 Replies 3
sjrcpa
Level 15

My question, is the 1041, reporting the home sale necessary?  Based on your facts, no.


ex-AllStar

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Marc-TaxMan
Level 8

Why fight it?

Report the sale on Dtr's 1040 with zero gain/loss so it clears IRS computer matching review; and on 1041 which closes out in same year so any net loss (due to commissions and costs of sale) will flow thru on final K-1.

It all comes out the same in the end.

I would do it the way you suggested, but if they want to pay you to make it complicated, so be it.

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Camp1040
Level 8
Thank you sjrcpa & Marc. Now I feel I have options.
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