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I am guessing that your mom is trying to avoid losing her disability by reporting wages. You are correct, it cannot be paid to her on a Form 1099, as that is for distributions from qualified pension plans only.
There are a couple of alternatives. One solution is found in the IRS' instructions for Form 1099-MISC.
If an employee dies during the year, the accrued wages, vacation pay, and other compensation paid after the date of death must be reported. If the payment was made in the same year the employee passed, you must withhold social security and Medicare taxes on the payment and report them only as social security and Medicare wages on the employee's Form W-2. This ensures that proper social security and Medicare credit is received.
On the Form W-2, show the payment as social security wages (box 3), Medicare wages and tips (box 5) and the social security and Medicare taxes withheld (boxes 4 and 6). You do not need to not show the payment in box 1 of Form W-2.
If you made the payment after the year of death, do not report it on Form W-2, and do not withhold social security and Medicare taxes.
Whether the payment is made in the year of death or after the year of death, you also must report the payment to the estate or beneficiary on Form 1099-MISC. Report the payment in box 3 (rather than in box 7 as specified in Rev. Rul. 86-109, 1986-2 C.B. 196).
Enter the name and TIN of the payment recipient on Form 1099-MISC. For example, if the recipient is an individual beneficiary, enter the name and social security number of the individual; if the recipient is the estate, enter the name and employer identification number of the estate. The general backup withholding rules apply to this payment.
Alternatively, if you are simply attempting to get cash out of your father's company, assuming it was a corporation (since he could not receive a salary for a sole proprietorship or solo LLC), you could have the remaining board of directors declare a dividend. If there was any amounts that the company owed to your father as loans, they could also be paid off.
So, in summary of your question, you cannot pay your dad's salary to your mom and report it on a Form 1099-R. You also cannot pay any amounts for your dad after his death and report it on a Form W-2 for your dad. If you do pay any salary amounts earned by your dad but unpaid at the time of his death, you have to report those on a Form 1099-MISC, as instructed above.
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