A while ago I asked a question to one of the many accountants on this site Here's what was asked by me initially:
I am an administrator of an estate. The final accounting has been submitted to the courts, which then I will be able to distribute to the heirs and close probate . My question is, I know I will be filing 2010 taxes
, but how do the 2011 taxes work? Do I file this year too, along with 2010? Separately?
State/Country relating to question: California
My response from this site:
Thanks for your question.
Yes, you would file for 2011 a short period final return for the estate on Form 1041. The 2011 return would be due 3 1/2 months after the month in which the estate was closed. For example, if you distribute all funds and close by January 31, 2011, the short period return from 01/01/11 to 01/31/11 would be due on May 15, 2011. Be sure to mark this return "Final". You can use a 2010 Form 1041 if the 2011 form is not yet available but be sure to fill in the tax period dates at the top of the form. It would be best to file the 2011 return separate from the 2010 return just so there is no confusion when they open the envelopes.
Edited by JK_CPA on 1/19/2011 at 6:20 PM EST
My new question for you...
I am getting ready to work on the final return. There were 8 heirs that received $6,400 and two that received $25,000, not a huge estate.
1-My question is, do I need to include them somewhere on the taxes that they received money?
2, Next question is, over the years that probate was open, the estate paid bond on a yearly basis. It was a complicated probate that involved little pieces of property and in the end cost the estate more money than it was worth. The very first tax return, the estate paid over $11,000+ in taxes because the initial probate was a retirement fund- 403(b). Is it possible to recoup some of the $11,000 based on the estate having to pay bond for all eight years? Do I pretty much copy my 2010 1041 tax return I completed in the regular tax season for the final? I guess if I am able to recoup some money for bond, the answer would be no. If there is a way to do that, could you include which forms I need to fill out? Both federal and state (CA).