Bond Interest for deceased

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Subject Author Date Bond Interest for deceased Jeffrey 03-12-2009  Re: Bond Interest for deceased removeps-groups@yahoo.com 03-12-2009   Re: Bond Interest for deceased Steve Pope 03-12-2009  Re: Bond Interest for deceased Seth 03-23-2009  Re: Bond Interest for deceased Bill Brown 03-23-2009  Re: Bond Interest for deceased Seth 04-16-2009
Posted by Jeffrey on March 12, 2009, 11:42 am Please log in for more thread options My Mother died in October of 2008. At that time she held corporate bonds. The bonds are in the process of being redeemed, they all had a death put clause. I have two questions regarding this situation: 1. The estate will get the full value of the bonds (death put), even though some of them are selling for what she paid. Is there still a capital gain? 2. The process liquidating her bonds takes time. The estate is still receiving the interest payments from these bonds (in 2009). How are these treated tax wise? Thanks. Jeff -- << ------------------------------------------------------- >> << 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. >> << ------------------------------------------------------- >> Posted by removeps-groups@yahoo.com on March 12, 2009, 2:41 pm Please log in for more thread options > My Mother died in October of 2008. At that time she held corporate > bonds. The bonds are in the process of being redeemed, they all had a > death put clause. I have two questions regarding this situation: > > 1. The estate will get the full value of the bonds (death put), even > though some of them are selling for what she paid. Is there still a > capital gain? That depends on whether the bonds were amortized or not. > 2. The process liquidating her bonds takes time. The estate is still > receiving the interest payments from these bonds (in 2009). How are > these treated tax wise? My understanding is that the trust needs to pay the tax. This is done on form 1041. The table on page on page 27 of the instructions has the rates. The rates are high, and the exemption of $600 is small. You might need an expert to handle this thing. http://www.irs.gov/pub/irs-pdf/i1041.pdf -- << ------------------------------------------------------- >> << 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. >> << ------------------------------------------------------- >> Posted by Steve Pope on March 12, 2009, 9:29 pm Please log in for more thread options >> My Mother died in October of 2008. At that time she held corporate >> bonds. The bonds are in the process of being redeemed, they all had a >> death put clause. I have two questions regarding this situation: >> 1. The estate will get the full value of the bonds (death put), even >> though some of them are selling for what she paid. Is there still a >> capital gain? Tangentially, just because the bonds say "survivor put options" does not mean you will be able to put them. Often the bond issuer sets aside only a limited amount of funds to cover these puts, and when those funds are used up, you cannot put the bonds. >That depends on whether the bonds were amortized or not. If they are successfully put, or sold, there is a capital gain. The amortization election affects this gain. What I am wondering is if there's a step-up in basis possible. Steve -- << ------------------------------------------------------- >> << 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. >> << ------------------------------------------------------- >> Posted by Seth on March 23, 2009, 2:17 pm Please log in for more thread options > >>> My Mother died in October of 2008. At that time she held corporate >>> bonds. The bonds are in the process of being redeemed, they all had a >>> death put clause. I have two questions regarding this situation: > >>> 1. The estate will get the full value of the bonds (death put), even >>> though some of them are selling for what she paid. Is there still a >>> capital gain? >>That depends on whether the bonds were amortized or not. > >If they are successfully put, or sold, there is a capital gain. >The amortization election affects this gain. > >What I am wondering is if there's a step-up in basis possible. Wouldn't they be worth par as of the alternative (6 months after death) valuation date (especially if they've been put by then)? 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 (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Bill Brown on March 23, 2009, 2:31 pm Please log in for more thread options On Mar 23, 2:17 pm, se...@panix.com (Seth) wrote: > Wouldn't they be worth par as of the alternative (6 months after > death) valuation date (especially if they've been put by then)? > > Seth The alternative valuation date can only be elected (by the executor) if both the taxable value of the estate and the estate tax are lower on the alternative date. -- << ------------------------------------------------------- >> << 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. >> << ------------------------------------------------------- >> Similar Threads Posted accrued bond interest? 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