Accepted Answer

<p>Sorry for your loss...</p><p>On the federal level - as long as the total value of the estate is less than $3,500,000 (in 2009) - there is no estate tax due.</p><p>For all properties on your father's name - you will have stepped-up basis - equal to the fair market value of the property on the day he died - means - if you sell the property shortly after - there will not be any capital gain and no tax liability.</p><p>Funds in IRA will be taxable upon distribution - so you might want to plan the distribution wisely spreading over several years - to avoid higher tax brackets.</p><p> </p><p>You will need to file final income tax return for deceased - if your parents filed jointly - it still will be a joint tax return for 2009.</p><p>You need to file income tax return for the estate - form 1041 - there is no need to "create estate" - you may use your father's SSN for reporting.</p><p>Please see more information in the IRS publication 559 - <a href="http://www.irs.gov/pub/irs-pdf/p559.pdf">http://www.irs.gov/pub/irs-pdf/p559.pdf</a></p><p> </p><p>The New Jersey Division of Taxation offers a <a rel="nofollow" href="http://http://www.state.nj.us/treasury/taxation/pdf/other_forms/inheritance/o10c.pdf" target="_blank">brochure</a> with information about the state's estate and inheritance taxes. </p><p><span class="text-11-grey">In many instances, if all of a decedent's property passes to a surviving spouse, domestic partner, civil union partner, children, stepchildren, parents, grandparents or grandchildren, it will not be necessary to file an Inheritance Tax return with the Division of Taxation. In such cases, </span><a href="http://www.state.nj.us/treasury/taxation/pdf/other_forms/inheritance/itl8.pdf" target="_blank" class="text-11-grey">Form L-8</a><span class="text-11-grey"> may be used to secure the release of bank accounts, stocks, bonds and brokerage accounts and </span><a href="http://www.state.nj.us/treasury/taxation/pdf/other_forms/inheritance/itl9.pdf" target="_blank" class="text-11-grey">Form L-9</a><span class="text-11-grey"> may be used to secure the release of the State's lien on real property owned by the decedent</span>.</p><p> </p><p>A New Jersey estate tax return must be filed if the decedent's gross estate plus adjusted taxable gifts as determined in accordance with the provisions of the Internal Revenue Code in effect on December 31, 2001 exceeds $675,000. It must be filed within nine months of the decedent's death.</p><p> </p><p>Let me know if you need any help.</p><p> </p>

Expert:	LEV
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Accepts:	7904
Answered:	6/28/2009

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