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if the heir receives a 1099S in the name of the estate, do they do anything with it? Their name is not on the 1099S, only the "estate of the deceased"..
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The son & the ex-wife each got $87,000. but no K-1, only this 1099S without their name or Social.
My first thought was "Does this Title Agencyr know what their doing?"
It's interesting that they received the funds directly while the deceased/estate tax IDs are on the 1099S - so I might concur that the title company didn't properly handle the form. I agree with BobKamman above with the "substance over form" sentiment.
Sometimes, we have to work with what we've got - even when it may be in error.
If no estate return was or will be filed, and no K1 is forthcoming, I recommend that you report your client's half of what is reported on the 1099-S (the sale price, not proceeds). Add the expense of sale and the stepped up basis to determine any gain or (more likely) loss.
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