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RD
RD, Certified Public Accountant (CPA)
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Experience:  MBA, CPA
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Do we need to file a 1041 for my fathers estate

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Do we need to file a 1041 for my father's estate? After the debts, attorney and burial, there is a remaining balance of less than 9000 each for my brother and I. I am the administrator.
His estate consisted of 10000 from Auto Insurance death benfit, 27000 from the sell of his trailer and a time share worth 2000 that we are keeping; therefore I will assume that will raise the benefit to approx. 10000 each.

The fiduciary of a domestic decedent's estate, trust, or bankruptcy estate uses Form 1041 to report:

  • The income, deductions, gains, losses, etc. of the estate or trust;

  • The income that is either accumulated or held for future distribution or distributed currently to the beneficiaries;

  • Any income tax liability of the estate or trust; and

  • Employment taxes on wages paid to household employees.

The fiduciary (or one of the joint fiduciaries) must file Form 1041 for a domestic estate that has:

  1. Gross income for the tax year of $600 or more, or

  2. A beneficiary who is a nonresident alien.

Death benefit is generally not taxable and so is not included in gross income. Capital gain on sale of trailer will be included in the tax return. However, if you sell it in a short time after the death, there is not gain since the cost basis is stepped upto fair market value. So if the gross income is not $600 or more you are not required to file FOrm 1041 and hence, the attorney may be right.

 

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.

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