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Level 3
March 11, 2022
Question

Estate question

  • March 11, 2022
  • 2 replies
  • 19 views

I have a long time client who's husband died last April.  She brought her 2021 tax info in last week.  When I was going through it there is a closing statement in there showing a sale of a piece of land.  The proceeds were issued to my clients deceased husband (passed away 4/21/21) titled "proceeds to Estate of ________"  I talked to my client and evidently she applied for an EIN in the name above. I don't do a lot of work with trusts and estates and I want to call a CPA I know in town to pass this job onto him, but I would just like to have an idea of what needs to be filed.  I would think a form 1041 and marked final since this is the one and only transaction that will be done. Her attorney told her once the return is done they can close the estate.  Any suggestions would be greatly appreciated.  Thanks

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    2 replies

    IRonMaN
    Level 15
    March 11, 2022

    A 1041 would need to be filed.  But there shouldn't be any tax involved since the property would receive a step up in basis on the date of his death.

    Slava Ukraini!
    BobKamman
    Level 15
    March 11, 2022

    Yes, a 1041 showing the sale of the land, and it might generate a Schedule K-1 showing a capital loss for the beneficiary (presumably your client).  But probably not for 2021 since the estate is still open.  It doesn't have to be a calendar-year return, but lately I have been encountering resistance from fiduciaries when I suggest fiscal year.  

    Level 3
    March 11, 2022

    Quick follow up question: when filing the 1041 the holding period for the asset I assume would be short term even though the decedent held it for over 20 years...just wishful thinking

    IRonMaN
    Level 15
    March 11, 2022

    LT

    Slava Ukraini!