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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4011
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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My Mom died in Feb 2009. I was the executor of the will and

Customer Question

My Mom died in Feb 2009. I was the executor of the will and the sole inheritor of her only possession, an old house in the state of New Jersey. I live in the state of New York. The house was sold in may of 2010. I got 1099-s from the buyer. the sale price was 115,00.00. I received a check for 96,000.00. I read about form 706 but according to it, the value of the estate has to be at least 3 .5million. Do i file this 706 form, do I put this on my federal income taxes. I never had title to the house. The house was sold as " the estate of Mrs. Blank" so im not sure what to file what forms etc.
Submitted: 3 years ago.
Category: Tax
Expert:  Stephen G. replied 3 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

I presume it is your social security number on the 1099-S?

Customer:

actually the lawyer i had put moms SS# XXXXX the sale of the house because the state of New Jersey collected Taxes from the sale. Then I was tols 2 months agao to get a federal tax id # XXXXX the 1099s could be isued since the house was sold in the estate

Customer:

ill be right back there is someone ringing my doorbell , excuse me please for a minute, thanks

Stephen E. Grizey :

Wait a minute you mean NJ has state withholding under your mother's social security number

Customer:

yes

Customer:

I called the irs and tols them they said it could be changed after estate taxes were filed ???

Customer:

it was 2,300.00 dollars. I could use the money but if it becomes a legal mess then its not worth it

Customer:

the house was sold in the estate of XXXXX XXXXX. The buyers lawyer wrote a check to the executor of the estate, then my lawyer took it, put it in his account and wrote me a check from his account of course after all the fees and stuff were taken out

Stephen E. Grizey :

Well, you have a Fed ID for the Estate?

Customer:

yes

Stephen E. Grizey :

Did the 1099-s finally get corrected to the Estate's Fed ID?

Customer:

yes it did

Stephen E. Grizey :

but the withholding is still under your mother's social security #

Customer:

the 1099 isuing company sent me a letter and said moms SS# XXXXX invalid and they needed a fed tax ID # XXXXX I got and gave to them

Customer:

then i got the 1099s in the mail

Stephen E. Grizey :

Yeah, but what about the state of NJ?

Stephen E. Grizey :

Does the 1099 show the withholding on the FED ID #

Customer:

on the 1099 it says gross proceeds 115,000.00

Stephen E. Grizey :

I know, but there's no withholding listed, right?

Customer:

no withholding listed

Stephen E. Grizey :

1 question -

Customer:

ok

Stephen E. Grizey :

How adept or how much experience do you have doing tax returns?

Customer:

just turbo tax is what Ive used

Stephen E. Grizey :

OK

Stephen E. Grizey :

The reason I ask is that I'm going to tell you what has to be done, but I'm not sure you'll be able to do it without some professional help

Customer:

ok

Customer:

please tell me

Stephen E. Grizey :

I am, I'm just reviewing the timing; You have at least 3 returns to prepare.

Customer:

ok

Stephen E. Grizey :

First - let's determine your mother's situation.

Customer:

ok

Stephen E. Grizey :

She died in 2/09.............did anyone prepare a personal return for her for 2009?

Customer:

no, i didnt know i had to

Stephen E. Grizey :

Probably not if she didn't have enough income; was she just getting social security or what?

Customer:

she didnt have any money and i paid her utiliy bills for her, and her taxes for the house, sewer, food, etc, she was old and alone

Customer:

she got minimal social security

Customer:

that was all and some food stamps

Customer:

well it was on a debit card

Stephen E. Grizey :

OK, well that's how they knew her ss# XXXXX invalid as ss tells everyone when someone dies......

Customer:

ok

Stephen E. Grizey :

OK.......first of all you'll need to do a Federal & New Jersey personal return for her for calendar year 2010.

Customer:

ok normal federal for me and a jersey tax return for me ?

Stephen E. Grizey :

Now let me make sure I'm clear......no 1099-s was ever issued in her ss#, correct?

Customer:

correct only in the fed tax id number

Stephen E. Grizey :

Hang on I'll get to you......you are last in the chain of returns

Stephen E. Grizey :

ok, good

Customer:

ohh ok

Stephen E. Grizey :

You'll either want to make notes or make sure you print this out for yourself and/or whomever

Customer:

Im going to print it

Stephen E. Grizey :

On her personal returns for 2010, you'll need to do a Schedule D and report the sale of the house;

Stephen E. Grizey :

You'll want to use "various" as the acquisition date & the date of sale for the sales date.

Customer:

1 question, since she is dead and SS already made her SS# XXXXX will the return be accepted ?

Stephen E. Grizey :

Then you'll want to enter the $115,000 in both the cost & sales price columns to come out with no gain or loss..............

Stephen E. Grizey :

Just hold your questions until I get through this

Customer:

ok

Stephen E. Grizey :

The only reason you're doing these returns is to get the $2,300. back from NJ

Customer:

ok

Stephen E. Grizey :

You will sign the returns as Executor of her estate & attach a copy of your appointment as Executor

Customer:

ok

Stephen E. Grizey :

You'll probably get a check from NJ made out to the "Estate of x x x (your mother)"

Customer:

ok

Stephen E. Grizey :

Make sure you indicate final return on everything & list her Date of Death

Customer:

ok and include the death certificate?

Stephen E. Grizey :

We don't care if the IRS rejects it; it doesn't matter; we just want NJ to return the money

Customer:

ok

Stephen E. Grizey :

You don't need the death certificate

Customer:

ok

Stephen E. Grizey :

However, here's what you need to write on Schedule D under where you list the house sale

Stephen E. Grizey :

"Sale of real property reported on the Estate of x x x x -Fed ID # XXXXX - 2010 Federal Form 1041"

Stephen E. Grizey :

Next, and this is where it will get tricky for you...................

Stephen E. Grizey :

You need to do a Federal & NJ Fiduciary income tax return for the Estate on Federal Form 1041

Customer:

ok

Stephen E. Grizey :

I'll have to look up the NJ form #

Stephen E. Grizey :

Now I'm not sure you can handle this but here's what happens basically.............

Stephen E. Grizey :

I'll deal with the Federal 1st

Stephen E. Grizey :

This is where you report the actual #s related to the sale of the house

Stephen E. Grizey :

So again, you do a Schedule D for the Estate on 1041

Customer:

ok when i chatted with the irs question chat, he kept telling me form 706 as of 2010... I looked at form 706 and it doesnt seem to apply to the situation

Stephen E. Grizey :

Only this time instead of using the 115,000 for the cost & THIS IS IMPORTANT...........you want to add all the expenses, house closing, all legal fees, deed stamps, whatever (not the NJ State withholding) to the $115,000. & that larger figure becomes the tax basis (cost) for the sale on the 1041 Schedule D; then you use the 115,000 as the selling price & you'll come out with a capital loss on the sale.

Stephen E. Grizey :

Don't worry about the 706 right now

Customer:

ok

Stephen E. Grizey :

Now when you look over the 1041, you'll see there's a schedule B to list the money you received from the estate; there's a schedule K & K-1 & the K-1 should have a spot to list the capital loss & that should be carried over to you as the sale of the house should have really been reported on your ss# XXXXX your return because the title to real property vests in the heirs at law at the date of death & normally you would be entitled to use the capital loss & carryforward what you can't use this year to future years...........

Stephen E. Grizey :

The 1041 is difficult & you'll definitely need some help possibly either here or somewhere else.

Customer:

can I hire you to do all the returns ?

Stephen E. Grizey :

Now as far as your return goes, the way I'm leading you along here is that you'll only have one figure to enter on your personal return & that will be the capital loss from the Estate of x y z...........

Customer:

ok

Stephen E. Grizey :

We aren't allowed to do that here (as far as doing the returns); we aren't supposed to have any contact with customers outside of JustAnswer.

Customer:

ohh ok, Ill just do it then.

Customer:

hi

Stephen E. Grizey :

You can ask for me here if you want, Just ask for "Steve G" at the beginning of your question.

Customer:

ohh thats good. so Im going to just follow the order in which you laid everything out and if I have a question I can come back to contatct you ?

Stephen E. Grizey :

But you may need more help than I can give you this way; as you can see, I have to visualize the sequence & the forms; for me it would be much easier to to them too;

Stephen E. Grizey :

Hang on just a minute

Customer:

ok

Customer:

ill be back in a sec, bathroom

Stephen E. Grizey :

Re; the 706; the estate isn't large enough to require a 706, which is the Federal Estate Tax return; the people you talk to at the IRS can't grasp these type of situations; he was trying to tell you that's how you get the "step-up" in tax basis on the house to its FMV at the date of death; which is true except the return isn't required

Stephen E. Grizey :

One other thing is that on the Federal 1041 Schedule D - you need to note the the house "was acquired from Decedent ss# XXXXX at the date of death 2/xx/09"

Customer:

ok

Stephen E. Grizey :

The loss is long-term irrespective of the actual holding period as that's the rule when someone dies.

Stephen E. Grizey :

let me get the NJ Form # XXXXX you

Customer:

your help tonight is priceless. I want to make sure you get a fair payment for all that you are doing for me. I cant tell you how much I appreciate your time

Customer:

I see the fee says 45.oo if it will increase I will increase it to what you think is a fair price

Stephen E. Grizey :

That's what I'm here for...............I don't know where the 45. comes from, if you didn't enter it the moderators must do it based on the question; estate stuff is more complicated & unless you've done a lot of it, it gets tricky.......you can see what happens just with you selling your mother's house; you can imagine what happens when it gets involved.

Customer:

well thanks so much

Stephen E. Grizey :

The NJ return is logically NJ-1041

Customer:

lol, very good and thankyou!!!!!!!!!!!!!!!!!!!!

Stephen E. Grizey :

It is common to give a bonus if you wish;

Customer:

yes how do I give a bonus ?

Stephen E. Grizey :

I'll give you the normal closing statement that I give; plus we get a little larger piece of any bonus whereas the basic question is less of a % that they give us.

Stephen E. Grizey :

Please remember to "Accept", it is the only way we get credit for our work. Feedback, if you have time, and bonuses, where you think they are warranted, are always most appreciated.

I'll be happy to answer any follow-up questions you may have.

Stephen E. Grizey :

There must be a spot to do the bonus as you Accept the question's answer

Customer:

I will do everything for you to get all positive feedback and bonuses

Customer:

ok thanks thanks thanks and have a good evening, thankyou, donna

Stephen E. Grizey :

I've never given one, I just get them

Stephen E. Grizey :

Ok thanks

Stephen E. Grizey :

My compute is acting up - not sure if its me or the website

Customer:

ok well ill press accept now

Stephen E. Grizey :

Ok, that's funny Donna, i thought you were a guy - sorry, I like you better already

Stephen E. Grizey :

We,

Customer:

i pressed accept and it brought me back here

Stephen E. Grizey :

we will get you through this

Customer:

ill try it again

Customer:

thanks so very much

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4011
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and other Tax Specialists are ready to help you

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