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CGCPA
CGCPA, CPA
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Hello; I have a question about filing for 2010. In October

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Hello;
I have a question about filing for 2010.
In October of 2010, my dad passed away. At the time of his death, his home, cash, checking and savings accounts, US Savings Bonds and possessions (car, furniture etc.) totaled under $200,000. He also had a long term care insurance policy that would pay a nursing home or assisted living facility 36,000 a year for 2 years. He did not collect any funds from that policy, and at the end of the year I received a statement that the policy had a 'market value' that was rather low (but I don't have the amount with me).
As executor and sole survivor, I probated his will and got his estate established in early December, 2010.
His income for the year was from a US Government pension of about 1900 per month and Social Security, about 375 per month: both totaling roughly 22,500 for 2010, including a small amount of interest from the checking and savings accounts.
Everything he had was put into the estate account which amounted to about 15,000 in liquid assets and also included the car and home, worth roughly 5000 and 100,000 respectively. I paid out of the estate account anything that had to do with his financial matters such as 7000 co-pay that Medicare and his co-insurance did not pay to the rehab facilities he was at when ill, taxes on his home, utilities on his home and repairs to his home which is under contract for sale at 85000.
Sorry to be long winded.

I assume that I file my taxes as usual for 2010. I did not disburse anything from the estate to myself in 2010.
I also assume that I file his taxes based on his financials from Jan 1, 2010 to October 26, 2010, the date of his passing.
And, I must file an estate form (forgot the number, but I have it) for the 2010 financials of the estate.

Here is my question:

In December, 2010 after the estate was established, I cashed 19 US Saving Bonds from the early 1970s with a face value of 50 each. The proceeds for the bonds were about 4900, with 950 being principal and about 4000 being interest. I deposited the entire amount in the estate account.

Being that the interest is part of an estate and the estate is valued well under the estate taxable level, is the interest on the bonds taxable? And if so, on who's tax return is it reported; my dad's, the estate's or my return?

Thank you very much.

Joe
Submitted: 3 years ago.
Category: Tax
Expert:  CGCPA replied 3 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

 

You are mostly correct. The interest on the bonds will be taxable income for his estate and will require a filing. Any other income he received after his date of death is taxable along with this. It all gets reported on form 1041. There will probably be no tax (based just on what you report) but the return should be filed. I would also suggest that you consider applying to Social Security for his death benefit. It is not much (about $250) but why let it go? Also remember that the interest income on US Savings bonds, while taxable at the federal level, is not taxable at the state level.

CGCPA, CPA
Category: Tax
Satisfied Customers: 3740
Experience: over 40 years experience in tax matters
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