Mark Bole wrote:
[snip]
- quote -

from under the bed.

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Last time i visited this issue re a client, it was rather clear. Here's
what transpired.

Client had died two and a half years earlier, and daughter and siblings
had kept the house vacant since then. When they sold it, and visited
the lawyer for settlement, he asked them if Jimmie (my client) had used
the house as a personal residence. Yes, for maybe 20 years or more.

So he had Mary, the executrix, sign a form that attested to this fact to
support that it was the sale of a personal residence and therefore no
form 1099S had to be issued.

Since Jimmie's death the house had appreciated in value, and even after
selling expenses there was a gain.

I doubt that she (not my client because I told her otherwise) ever
reported it the right way. After ALL , the lawyer told her it wasn't
necessary.

ChEAr$,
Harlan

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Harlan Lunsford wrote:

- quote -

I got some grief from a fellow tax preparer once over the basics of this
issue, so if anyone would care to confirm my understanding of the
following or set me straight, much appreciated.

1. "Gross income" only includes the *gain* from a sale (not less than
zero), not the gross proceeds of a sale.

2. Because of stepped up basis on inherited property, the gross income
from a sale shortly after death can easily fall below the estate filing
requirement level of $600 (the point I think Harlan was making).

3. Receipt of a 1099-S Copy B (Proceeds of Real Estate Transaction for
Transferor) does not by itself trigger any filing requirement (estate or
individual), no matter the amount - it is the gross income (gain on
sale) that is used to determine filing requirement.

Is there some practical benefit to filing an estate/trust return not
otherwise required, simply to ward off inquiries from the IRS about a
1099-S that never matched a return filed with them, or to start a
statute of limitations clock, or to provide heirs (and the IRS) with
Schedule K-1's connecting the estate's tax ID with the individual
filer's tax ID?

Similarly for a stock sale with little or no gain, and a 1099-B issued
under the tax ID of the estate or (erroneously) the decedent -- is
filing not necessarily required but a good idea anyway?

Incidentally, in some other thread a long time ago I asked about IRS
instructions for nominee forms other than 1099-INT and 1099-DIV. I
finally found what I was looking for, namely page 64 of Pub 550 (2007)
specifically mentions nominee filing of Forms 1099-B and 1099-S, which
in the above discussion would eliminate one of the possible reasons for
filing a return not otherwise required to be filed (showing how the
amount reported under one tax ID really belongs to another).

-Mark Bole

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Harlan Lunsford wrote:
- quote -

said, it only takes $600 of gross income to trigger an income tax
return for an estate.

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Alan wrote:

- quote -

Deductible by the estate IF an estate return is required to be filed,
which doesn't happen very often. Therefore the gain/loss passes through
to the heirs.

ChEAr$,
Harlan Lunsford, EA n LA,
on the way to Baltimore tomorrow

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Stuart Bronstein wrote:
- quote -

completing Schedule B of the 1041.

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Stuart Bronstein wrote:
- quote -

As Alan indicated, it *can* pass on capital losses, but only in the
final year.

My (admittedly limited) experience with this involved capital loss
solely due to expense of sale (real estate commission, etc), and since
it was the final year of the estate, all the loss was passed through.

I don't disagree with Bill Brown's clarification, but will add that
according to my research resource, it comes down to facts and
circumstances, and converting to a rental is one income-producing use
that the IRS most likely would *not* challenge.

-Mark Bole

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Alan <sfcnm-mtm[at]yahoo.com> wrote:
- quote -

The estate can pass on capital gains to the heirs - why not capital
losses?

Stu

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Bill Brown wrote:
- quote -

the estate's taxable income. A net capital loss stays with the
entity until its final year. Only then can any remaining capital
loss be passed through to the beneficiaries.

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On Aug 7, 2:13*pm, Mark Bole <ma...[at]pacbell.net> wrote:
- quote -

property for the capital loss to be deductible.

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John Beurket wrote:
- quote -

If the residence was first converted to an income-producing use, such as
a rental, yes.

If a beneficiary lived in the residence, then no.

Otherwise, definitely maybe. The IRS position is no, but there have
been some court cases on this where it was successfully argued that the
estate gets a stepped-up basis on the property and the expense of sale
then becomes a deductible loss, typically passed through to the
beneficiaries.

In your case, it sounds like you are talking about an actual decrease in
market value rather than just expense of sale, but the result should be
the same.

-Mark Bole

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When the residence of the decedent is sold by an estate for less than
the appraised value at the time of death, can a capital loss be claimed?

John Beurket

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