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Posted by nospam on July 28, 2007, 12:24 am
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> Decedent died in 1993. Estate Tax return filed . . .
> (taxable estate was over $600K) . . . and . . . taxes
> paid and estate closed in mid-1990s. In 1999,
> evidence was uncovered that a third party could
> have been responsible for the decedent's death
> . . . and lawsuits are filed. In 2007, settlement is
> reached.
>
> how (and by whom) is the settlement reported for
> tax purposes. Does the executor reopen the
> estate and report the settlement as an asset of
> the estate? Or, do the beneficiaries report their
> shares of the settlement as some form of income?
> Or, is there some other way this is handled? Does
> the fact that the evidence that led to the lawsuit
> wasn't discovered until well after the estate was
> closed have any impact on the answer?
>
> Any advice or suggestions how to further research
> this would be appreciated.
The "Subject" you assign this query aggravated by how you
state the underlying facts (e.g., your apparent presumption
that someone, whoever it may be, is obliged to report the
proceeds of the settlement to which you refer "as some form
of income [sic]") raises but also begs the question:
Why do you presume but without citing any provision of
federal or state law that the proceeds of a wrongful death
lawsuit the underlying claim of which was not made until
after the deceased's death (so that not even a pre-suit
claim much less the wrongful death lawsuit itself was
pending while the decased was alive)* is an "asset of
[whether or not a] closed estate" for estate tax or anyone's
income tax purposes?
(You also do not say in your posting whether the settlement
was negotiated/worded to make clear that no portion of the
settlement payment is recompense for punitive damages or
anyone elses's other than the deceased's emotional stress;
although, depending on the facts in these respects, these
issues might raise other taxation questions.)
-------------------
* Distinguish the requirement that the value of a
cause of action for the benefit of an estate, if
pending when decedent died, must be estimated
and included in the federal gross estate to be
reported on the federal estate tax return (see
Fed. Est. Tax Regs. =A7 20.2033-1).
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