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Arthur Rubin
Arthur Rubin, Tax Preparer
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Experience:  22 years of tax preparation experience, including individual, trust, and estate returns.
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My father died 16 years ago and my brother has since found

Resolved Question:

My father died 16 years ago and my brother has since found some unclaimed money from another state. The check came in my name since I am executrix. Can we claim this as capital gain and not go thru the estate? How do I split it with my brother so he has to accept half the tax burden? What proof do I need that he got half?
Submitted: 4 years ago.
Category: Tax
Expert:  jgordosea replied 4 years ago.

Greetings,

 

What is the nature of the unclaimed money (bank account, tax refund, pension,etc)?

Does it include any income that has not been reported for income taxes (interest)?

 

Were there any unpaid liabilities when the estate was closed?

 

Did the estate pay inheritance or estate taxes (or would this amount cause it to)?

 

Are/were you and your brother the only beneficiaries of the estate?

 

Why do you think there is a tax burden when inheritance is usually not taxed?

 

These answers will help us to provide an accurate answer for your situation.

Thank you.

 

 

Customer: replied 4 years ago.

1. I believe it was stock.

2. It is unclaimed money from the State of MD.

3. We paid all taxes to the State of Georgia which is where they died.

4. We did pay taxes on the estate, not sure which one it was, I no longer have any of that infor since it has been over 16 years since they died. The estate was over 500K total.

5.My brother and I are the only beneficiaries.

6. Do we have to file through the estate? Can we claim it instead on our personal income tax as capital gain? The check is made out to :

Estate of R. Hoyt % me et al

Expert:  Arthur Rubin replied 4 years ago.
I assume the estate is closed?

If Georgia has an inheritance tax, you should report it to them to get a tax clearance. I can't advise you to violate the law, but, unless you need a tax clearance to distribute the stock or cash in your name, it's unlikely the state will ever know. It's also unlikely that you will owe additional inheritance tax, even if you do report it, but that's not clear.

If it's other than "real property", MD doesn't have an interest.

The Federal estate tax exemption was $600K then, but I'm pretty sure the statute of limitations on the estate tax return have run, even if you weren't required to file one.

Estate income tax returns (Federal and state) are also closed.

If it was stock, MD should send you a form 1099-B for the sale (in theory). You can then compute capital gains, with the value of the stock at your father's death (properly allowing for stock splits) as the basis. If you receive a 1099-B, "you" (acting as the estate) can send both you and your brother a nominee 1099-Bs to reflect your respective shares. In general, the two of you would pay tax on it just the same as if your father had sold it in his lifetime (with the exception of the basis recalculation due to his death), and the estate needs to issue the nominee 1099s with basically the same information as the 1099 "it" receives.

If you can't determine the source of the income, you can probably assume that it was converted to cash while he was alive (or, at least, by 2006), and hence not subject to income tax.

Edited by Arthur Rubin on 6/2/2010 at 11:46 PM EST
Arthur Rubin, Tax Preparer
Category: Tax
Satisfied Customers: 1235
Experience: 22 years of tax preparation experience, including individual, trust, and estate returns.
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