Home Page link  

1041 - Tax Return for An Estate

  
Groups | Search | About
User Password
Register Now! Lost Password?

Taxes General Forum - Tax professionals meeting place and answers to queries. (Moderated)

 Post an article  get this group's latest topics as an RSS feed add this group's latest topics to your My MSN content add this group's latest topics to your My Yahoo content  add this group's latest topics to your Google content  YahooMyWeb Yahoo!  Google Google  Windows Live Favorites Windows Live  del.icio.us del.icio.us  digg digg  Add to Netscape Netscape
Subject Author Date
1041 - Tax Return for An Estate sgallagher@rogers.com 02-27-2007
Posted by sgallagher@rogers.com on February 27, 2007, 10:11 pm
Please log in for more thread options
 My father was receiving some class action awards prior to
his death in 2006. They were not considered taxable to my
father when he was receiving them. His death was not
related to the class action cases. Some class action awards
will be coming in for several years still, according to the
lawfirm handling them.

In order to continue receiving these awards my mother had to
have his will probated in Florida and a bank account opened
in the name of my father's estate, as awards will be
"Payable to the Estate of .........."

Part of this process was the issuance of an EIN for the
estate.

The estate has no assets as everything else was jointly
owned, and passed into my mother's name.

The IRS sent my mother a letter telling her to file a 1041
for the estate for 2006. The estate had no income in 2006.

Questions:

Are the class action awards still tax free?
If yes, and the estate generates no other income, does she
still have to file a 1041 for the estate.

If an award does come in, and she cashes the check in the
estates bank account, and then transfers it into her
personal bank account, is it considered taxable income to
her.

Thanks.

P.S. As a side note, we have confirmed that there is no
"estate tax" due.

<< ======================================================= >>
<< 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 (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Benjamin Yazersky CPA on March 1, 2007, 6:47 am
Please log in for more thread options
> My father was receiving some class action awards prior to
> his death in 2006. They were not considered taxable to my
> father when he was receiving them. His death was not
> related to the class action cases. Some class action awards
> will be coming in for several years still, according to the
> lawfirm handling them.
>
> In order to continue receiving these awards my mother had to
> have his will probated in Florida and a bank account opened
> in the name of my father's estate, as awards will be
> "Payable to the Estate of .........."
>
> Part of this process was the issuance of an EIN for the
> estate.
>
> The estate has no assets as everything else was jointly
> owned, and passed into my mother's name.
>
> The IRS sent my mother a letter telling her to file a 1041
> for the estate for 2006. The estate had no income in 2006.
>
> Questions:
>
> Are the class action awards still tax free?
> If yes, and the estate generates no other income, does she
> still have to file a 1041 for the estate.
>
> If an award does come in, and she cashes the check in the
> estates bank account, and then transfers it into her
> personal bank account, is it considered taxable income to
> her.
>
> P.S. As a side note, we have confirmed that there is no
> "estate tax" due.


I'm not going to address the issue of what is being
collected is taxable or not. That is way beyond the scope of
what can be addressed here.

Sounds to me like the estate collected this class action
award & distributed it to the beneficiary of the estate.

You should read the instructions for filing form 1041 to
determine if you need to file it. Same applies to any state
income tax for an estate. This has nothing to do with the
706 - the estate tax.

Just because your father's assets were held jointly & passed
directly to your mother only is indicative that there is no
probate estate. A 706 may still need to be filed, depending
on many different factors.

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----

<< ======================================================= >>
<< 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 (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by ed on March 1, 2007, 6:47 am
Please log in for more thread options

> My father was receiving some class action awards prior to
> his death in 2006. They were not considered taxable to my
> father when he was receiving them. His death was not
> related to the class action cases. Some class action awards
> will be coming in for several years still, according to the
> lawfirm handling them.
>
> In order to continue receiving these awards my mother had to
> have his will probated in Florida and a bank account opened
> in the name of my father's estate, as awards will be
> "Payable to the Estate of .........."

The payor wanted to be sure that mom was taking the money
without paying the funeral bills, and that mom was the sole
heir. There were simpler ways to do it than Probate, but
the Probate shouldn't have cost you anything, or very
little.

> Part of this process was the issuance of an EIN for the
> estate.
>
> The estate has no assets as everything else was jointly
> owned, and passed into my mother's name.
>
> The IRS sent my mother a letter telling her to file a 1041
> for the estate for 2006. The estate had no income in 2006.

Don't file a return then.

> Questions:
>
> Are the class action awards still tax free?

YES

> If yes, and the estate generates no other income, does she
> still have to file a 1041 for the estate.

Yes if they (the estate income) are over $600

> If an award does come in, and she cashes the check in the
> estates bank account, and then transfers it into her
> personal bank account, is it considered taxable income to
> her.

NO it is a flow-through tax free settlement. No tax to the
1041 and no tax to mother.

> P.S. As a side note, we have confirmed that there is no
> "estate tax" due.

P.S> It will be unusual to keep an estate open for several
years, but it looks like you'll have to. Maybe. after a
year, they'll write the checks to mom and you can close out
the estate with a final 1041.

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 (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Kreig Mitchell on March 1, 2007, 8:49 pm
Please log in for more thread options

> My father was receiving some class action awards prior to
> his death in 2006. They were not considered taxable to my
> father when he was receiving them. His death was not
> related to the class action cases. Some class action awards
> will be coming in for several years still, according to the
> lawfirm handling them.
>
> In order to continue receiving these awards my mother had to
> have his will probated in Florida and a bank account opened
> in the name of my father's estate, as awards will be
> "Payable to the Estate of .........."
>
> Part of this process was the issuance of an EIN for the
> estate.
>
> The estate has no assets as everything else was jointly
> owned, and passed into my mother's name.
>
> The IRS sent my mother a letter telling her to file a 1041
> for the estate for 2006. The estate had no income in 2006.
>
> Questions:
>
> Are the class action awards still tax free?
> If yes, and the estate generates no other income, does she
> still have to file a 1041 for the estate.
>
> If an award does come in, and she cashes the check in the
> estates bank account, and then transfers it into her
> personal bank account, is it considered taxable income to
> her.
>
> P.S. As a side note, we have confirmed that there is no
> "estate tax" due.

It sounds like there might be an estate tax due. Did you
confirm that the right to future payments was included in
the estate? With regard to the other issues, it sounds as
if you will want to review the income in respect of a
decedent rules in order to report any taxable income. Your
tax attorney or accountant should be able to easily address
these issues for you.

Kreig Mitchell
www.irstaxtrouble.com
www.irstaxtrouble.com/blog.htm

<< ======================================================= >>
<< 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 (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Seth Breidbart on March 3, 2007, 4:29 am
Please log in for more thread options
>> The estate has no assets as everything else was jointly
>> owned, and passed into my mother's name.

>> Are the class action awards still tax free?
>> If yes, and the estate generates no other income, does she
>> still have to file a 1041 for the estate.

>> P.S. As a side note, we have confirmed that there is no
>> "estate tax" due.

> It sounds like there might be an estate tax due.

Why?

> Did you
> confirm that the right to future payments was included in
> the estate? With regard to the other issues, it sounds as
> if you will want to review the income in respect of a
> decedent rules in order to report any taxable income.

If the money from the class action suit is in effect a
refund for overcharges, then (unless the payments were
deducted in the first place) they aren't taxable at all
(though they should be included in the value of the estate).

Seth

<< ======================================================= >>
<< 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 (2006) - All rights reserved. >>
<< ======================================================= >>

Similar ThreadsPosted
estate return (1041) questions February 6, 2008, 9:04 am
Re: 1041 for estate in litigation October 24, 2006, 7:27 am
Re: 1041 for estate in litigation October 25, 2006, 6:46 pm
1041 v. 1040 taxable income for estate planning trusts December 27, 2007, 4:41 pm
Elect QRT when no Estate Tax return due? March 15, 2007, 1:09 am
Real Estate Return on Capital and Return of Capital October 19, 2007, 10:20 pm
Suppose I find assets after the estate tax return is filed? November 27, 2007, 11:23 am
Does a copy of other state return serve as a proof for Virginia tax return ? April 9, 2008, 5:42 pm
Filing status different for Federal return and State return April 11, 2007, 11:47 pm
1041-X? March 3, 2008, 7:29 pm

Contact Us | Privacy Policy
This site is not affiliated with Intuit - makers of Quickbooks and Quicken software
This site is not affiliated with Sage Software - makers of Peachtree accounting software
XML SitemapXML Sitemap