On Feb 10, 2:55 am, Herb Smith <smithf...[at]aol.com> wrote:

- quote -

I was thinking, maybe this is a case of the broker's or company's
records not being updated. The original post said that the $2000 was
a dividend payment. So there must be underlying shares. In general,
I imagine the broker or company has a big database of the name and
social security number of each person who owns shares, and how many
shares they own, so that they know how much dividend to pay. So maybe
the broker's or company's records were not updated at the time of
death. If this is true, then the trust should pay no tax, the money
should be distributed to the beneficiaries, and they should report it
on Schedule B. That is, this is like the nominee dividend concept
mentioned in one of the other posts. And they should also update the
broker's or company's records. Note that this way they could end up
paying more tax, such as 15% on the entire $2000 with no exemption if
the dividends are qualified, or 28% if the dividends are not
qualified. The exact rate of course depends on how much the
beneficiaries make, and could be as low as 5% or as high as 35%.
Also, if the dividend was 20k, then the trust tax would almost
certainly be higher.

10,700 ----- 2,764.00 + 35% 10,700
2764+(19600-10700)*.35 = 5879
20000*.28 = 5600


- quote -

Thanks for setting the clarification.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

David wrote:
- quote -

IRS and, if appropriate, paying US taxes. Thus, their living abroad
should not affect the tax consequences of a distribution. As this is
not earned income, it is not eligible for the foreign earned income
exclusion.

Lanny K Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"removeps-groups[at]yahoo.com" <removeps-groups[at]yahoo.com> wrote:

- quote -

In my case one beneficiary lives and works in Canada ( a landed
immigrant) and the other works and is resident in New Zealand. They
both have well paying jobs. I'm not sure how or where they would be
taxed on a US estate income distribution. The estate income would be
equally distributed. They are both still US citizens.

Thanks for any advice.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Feb 9, 10:24�pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -

That's Estate INCOME Tax, and if the estate pays it, the distribution
of the remainder is tax free to the beneficiaries

- quote -

If the estate pays the income tax on $2000, the remainder ($1790) is
distributed tax free to the beneficiaries. No K-1 is necessary (or
needed).

- quote -

You are confusing Estate Tax and Estate Income Tax. Quite different
creatures. The first (computed on Form 706) is a tax on the "wealth"
of the decedent's estate. The estate always pays that tax, NOT the
beneficiaries. If the executor distributes the assets of the estate
(and the FMV exceeds $2M, pre-2009) before that tax is paid, the
executor may be on the hook for the tax bill.

The Estate Income Tax is reported annually on Form 1041, and includes
only income earned by the estate post-death. Either the estate or the
beneficiaries can pay that tax bill, choice of the executor, although
it is usually done by distribution to the beneficiaries via K-1, and
they include the income on their individual tax returns. The 1041 is
filed for each year that the estate has income of $600 or more.
Point is, if the estate has income, somebody has to pay the income
tax, and it is perfectly acceptable to keep that tax bill as low as
possible (legally, of course).

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Feb 9, 3:27 pm, "D. Stussy" <s...[at]bde-arc.ampr.org> wrote:

- quote -

Yeah, I forgot about the exemption. It might be handy for a small
amount like $2000. The estate tax would be on taxable income of
$1400, and 15% of $1400 is $210, so the estate tax is $210 if the
$2000 is not distributed.

Then when the $2000 is distributed to beneficiaries, is it taxable to
them?

Second scenario. Say the estate distributes the $2000 to
beneficiaries right away, there is no tax for the estate right, but is
there tax for the beneficiaries? The original post said that the
estate was very small, which I imagine to be under the $2 million
estate exemption in 2007, so assuming that the original estate plus
this $2000 is still under $2 million, it seems there should be no tax
for the estate or the beneficiaries.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

<removeps-groups[at]yahoo.com> wrote in message
news:11bda198-3f3b-469d-a82d-de3c9f2627bf[at]z27g2000prd.googlegroups.com...
- quote -

The OP didn't specify, so how should I know?

- quote -

Wrong. Not everything. An estate gets a $600.00 exemption; why not use
it?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Feb 7, 7:59 pm, "D. Stussy" <s...[at]bde-arc.ampr.org> wrote:

- quote -

Out of curiosity, to which beneficiary or beneficiaries will this 2k
be distributed?

- quote -

The estate rates are much higher than the individual tax rates, so
it's better to distribute everything ASAP.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"David" <David[at]noospam.com> wrote in message
news:498dd284.15916081[at]216.168.3.70...
- quote -

The estate pays tax on all income it hasn't distributed to beneficiaries.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Feb 7, 3:51*pm, Da...[at]noospam.com (David) wrote:
- quote -

The tesstate pays it to make sure it's paid. It';s the estates's
income anyway.

ed

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

kamlet[at]panix.com (Arthur Kamlet) wrote:

- quote -

I have a similar question. My wife's estate has an EIN and about 10k
income in 2008 and some in 2009. The estate is not yet closed but
could be in about a month, the 1041 is due by the end of July. Does
the estate pay the income tax or do the beneficiaries( her children)?
If the estate is liable as I have been assuming, is it ok if I paid
the tax myself? Does the IRS care who pays it?

My objective here is simply to avoid any IRS problems and get the most
money possible to her kids as soon as possible.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"glass" <glass[at]merser.net> wrote in message
news:498cd7b4$0$35413$892e0abb[at]auth.newsreader.octanews.com...
- quote -

Thanks for the input...
--

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Arthur Kamlet" <kamlet[at]panix.com> wrote in message
news:gmiqtl$nad$1[at]reader1.panix.com...
- quote -

See also the "nominee 1099" procedure. This means you file a 1099-DIV with
the decedent as payor and the true recipient as payee.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Feb 6, 8:16*pm, kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

Follow Art's advise. Don't reopen Probate.or 1041. Your problem is
how to get the check cashed. There are many ways if you can't figure
it out.

ed

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <498cd7b4$0$35413$892e0abb[at]auth.newsreader.octanews.com> ,
glass <glass[at]merser.net> wrote:
- quote -

As estates go, 2000 is not large.

I would just report this income on the beneficiary's 1040,

If the IRS asks about it, very factually let them know
that there was no estate EIN taken out, that the beneficiary is
Jane Doe, and she delcared this income on her current year 1040,
just as if the estate had received and distributed it to her.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

My mother-in-law died in 2007 with a very small estate so we filed a 2007,
1040 final decedent return.
However, a dividend payer made a ~$2000 payment to the deceased person in
January
2008 with the SSN of the deceased.

Thus, in 2009, we received a 1099-DIV, with the deceased persons SSN which
has to be dealt with.
Anyone know how to handle this???

IRS says to obtain a estate EIN, file a 1041 with a K-1 identifying the
beneficiary, then the beneficiary will add the K-1 income to his return
for 2008. Sounds easy but a 1041 is a nightmare and the long term impact of
this process is unknown and may have some impact on the closed probate. Any
thoughts on this also will be appreciated???

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >