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Posted by ed on September 30, 2008, 6:48 pm
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> Bernie Cosell wrote:
> > ....and how is it accounted for:
>
> > If an estate has illiquid assets that need to be liquidated (at the least
> > to pay the estate taxes and estate expenses, perhaps also to be able to
> > make the distributions to the heirs), how are the capital gains (or losses)
> > handled? I can't imagine that the IRS would just let that opportunity to
> > tax "slip by" but I can't quite figure out which party(ies?) get stuck with
> > them.
>
> > Also, since the estate is evaluated at the time of death, I assume that the
> > liquidation would only reflect capital gains (or losses) relative to the
> > assessed value of the assets at the time of death? And how does the
> > six-month re-valuation affect this (would the capital gains/losses be
> > against the *final* assessed value of the assets, either time-of-death or
> > six months later, whichever is used?) [and yes, this is a real situation
> > and I'm talking to both my accountant and my lawyer about it -- I'm just
> > looking for other opinions and/or background on how these kinds of things
> > work :o)] Oh, and I guess there'd be parallel questions about the state
> > estate taxes, New York State in this case. THANKS.
>
> > /Bernie
>
> An estate can have capital gains and losses. They get reflected
> on the 1041 Schedule D (income tax return for estates and trusts)
> and are included in computing the estate's total income on the
> 1041. If losses exceed gains, the excess losses remain with the
> estate until the final income tax return is filed. I.e., they do
> not get passed through to the beneficiaries until the final
> income tax return is filed. As to how much of any net capital
> gains (long & short) get passed through to the beneficiaries,
> that will depend upon whether there is a requirement to
> distribute the gains or they are actually paid to the beneficiaries.
>
> --
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Alan is correct. The basis is DOD value or, if a sale is more than 6
months later then DOD, the 6 month alternative date if elected for ALL
assets. Use 1041 Schedule D even if there is no gain/loss. The gains
must be taxed in the Estate and cnnnot be pased through to
beneficiaries if the Estate sells the asset. The the asset is
distributed the beneficiary takes it at the DOD value and is
responsible for the tax when sold.
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. >>
<< ------------------------------------------------------- >>
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