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Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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My father died one year ago. He had a living will, will etc.

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My father died one year ago. He had a living will, will etc. I am the executor. Since that time we have sold the personal property (30,000 dollars) evenly between the beneficiaries. I filed a income tax return for the state and IRS this year and nothing was due. 2 months ago we sold his house for $225,000 It was appraised for between $350,000--$400,000. So it was a loss. That money has been distributed equally between the beneficiaries. There is nothing else left except $15,000 that was remaining from the personal property sales and I kept in case their were any bills etc. Although I got an EIN from the IRS for the estate, since there were no large assets--more loss, I do not believe that I should have to file anything else with the IRS or the State. I would like to distribute the rest of the money equally and close his last remaining bank account which I hold jointly with him. Am I right or is there something else that I have to file to close the trust ?


Hi and welcome to Just Answer!
Please see for reference instructions for the form 1041 - which is an income tax return for the estate -
page 4 - Who Must File
Decedent's Estate. The fiduciary (or one of the joint fiduciaries) must file Form 1041 for a domestic estate that has:
1. Gross income for the tax year of $600 or more, or
2. A beneficiary who is a nonresident alien.
Thus if the estate sold the house - its gross income is above $600 - and the estate tax return is required.
There will not be any tax liability - because of loss - however filing still is required. On the tax return - you will report teh sale price and the basis and will calculate the loss.


When all assets are distributed - you will file a final tax return for the estate - the check box "Final" will be checked - and will pass the loss to beneficiaries - who will use it on their individual tax returns.
Let me know if you need any help with reporting.


Thank you. XXXXX file the 1041 now, or do I have to wait until the end of the year? Also upon filing the 1041 can I go ahead and distribute and file a final tax return for the estate and what is that form called.


Yes - you may file now - depending on number of years - you may need to file one or two tax returns.
That would be actually more beneficial to file - because beneficiaries of the estate will be able to use losses to reduce their taxable income.

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