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Hi and welcome to Just Answer!Please see for reference instructions for the form 1041 - which is an income tax return for the estate - http://www.irs.gov/pub/irs-pdf/i1041.pdf page 4 - Who Must FileDecedent'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, or2. 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.