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Where on 1041 do you list the sale of house from an

Where on 1041 do...

Where on 1041 do you list the sale of house from an estate....non taxable event?

Lawyer's Assistant: Estate laws vary by state. What state are you in?

MA we were told it is not taxable but need to reflect. the trust sold the house and we were informed that these would be no tax as the sale was reported to the IRS as a sale solely by the trust . there was no capital gain to the trust

Lawyer's Assistant: What documents or supporting evidence do you have?

Letter from attorney and 1099 - s

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

Also we receive a small annuity which is deposited into a non interest bearing trust checking account....we also need to report this somewhere on the 1041?

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Answered in 1 hour by:
3/11/2018
Attorney Wendy
Category: Legal
Satisfied Customers: 496
Experience: Member at Keefer & Keefer LLC
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Hello. My name is ***** ***** I am an attorney. I am working on preparing a response to your questions and should have that to you shortly.

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Do you have a copy of the 1099-s you received that you could attach and send to me?

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Sorry for the several messages - I do not need the full 1099-S if you prefer not to share that but I do need to know who the grantor/seller is listed as on that form. Thank you.

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Assuming the 1099-S properly shows the trust as the seller of the property, the gain or loss on that transaction to the estate is reported on Schedule D of Form 1041 with information that will be calculated using Form 8949; that figure is then entered on Line 4 of Form 1041. Form 1041 is an income tax return for estates (it is not the estate tax form) Full instructions for Form 1041 can be found here: https://www.irs.gov/pub/irs-pdf/i1041sd.pdf

The key information you will need to determine is the trust's basis in the property (the value that sets the starting point from where you will then compare the sale price to determine if there was a gain or loss to be reported). The reporting of this amount on Form 1041 does not mean it is a taxable event, but it does need to be reported and accounted for. It sounds like you were informed the sale resulted in no gain to the trust, which would mean the sale price and the basis were the same or the sale price was lower than the basis in the property. It also depends on whether the trust is revocable or irrevocable. Certainly the attorney letter with the opinion the event is not taxable leads me to believe there either was no gain as a result of the sale, though there may be other reasons or scenarios that lead to that conclusion.

For the annuity, it depends on whether the trust receives the annuity or you personally. If it is the trust that amount should be entered as income if this is an annuity that goes into the trust; if it is an annuity that is paid out of the trust to beneficiaries it is entered as part of the income distribution deduction if it is required to be distributed.

I hope this helps. Unfortunately, the IRS does not strive for simplicity in these matters and they can be very difficult and confusion. Consulting an accountant may provide some additional assistance. Confirming information and how to account for these amounts with the attorney who provided the opinion on taxability may also be worthwhile as that individual likely has more in depth knowledge of the particular facts.

If you need further help, please reply to this email. If I answered your question and provided excellent service, I would greatly appreciate your 5 star rating.

Please note: This information is for educational purposes only and is not legal advice. No course of action is being proposed and no attorney-client relationship or privilege has been formed as a result of this conversation.

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Customer reply replied 1 month ago
Here is some additional info from the attorney's letter........it states..'.that the 1099-s shows that the Trust sold the house on....for the gross sales price....There will be no income tax to the Trust resulting from the sale of the house because the entire sale has been reported to the IRS as a sale solely by the Trust and due to the death....the Cost Basis of the house to the Trust was legally stepped up and sold for the same amount meaning that there was no capital gain....we will not be required to report the house on our personal 2017 tax returnDoes this additional info help you in your response to me?

Yes, that does help. For trust and estate tax purposes - and in the simplest terms - basis is essentially stopped/determined at the time of death so if a death occurs. The death is a triggering event the determines the time value is established. Thus, it sounds from the attorney's letter that the home sold for an amount equal to the basis such that there is no gain or loss. That should be reflected on Line 4 of 1041 as 0, after completion of Schedule D and the relevant forms has the tax basis entered as the same figure as the sales price. Does that make sense?

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Customer reply replied 1 month ago
sounds like there is a schedule D for 1041....right?

Yes, there is a Schedule D for Form 1041 and then also form 8949 that is used to calculate numbers for Schedule D and then those numbers will go on the 1041. Sounds like for the real estate sale it should be as simple as putting in the tax basis/value at time of death either under the short term or long term holdings (depending how long the home was owned) and then the sale price.

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Customer reply replied 1 month ago
would I need to complete form 8949 both the figures are the same? also what forms do I have to file and to who?....just IRS? the bot***** *****ne is that there is no impact...no taxable amount o n this sale.
Customer reply replied 1 month ago
would I use the same forms to report an annuity deposited into a trust non interest bearing checking account?

Schedule D or simply the income line on the 1041 should provide an appropriate place for the annuity funds - they are treated like any other income coming into the trust.

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Correct as to the 8949 form; you will file Form 1041, Schedule D, Form 8949 with the IRS. I am double checking the Massachusetts tax filing requirements for you and will have that to you shortly.

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Form 2 - Fiduciary Income tax return appears to be required to be filed in Massachusetts. The link to that form is here: https://www.mass.gov/files/documents/2018/02/07/dor-2017-fido-form-2.pdf

The instructions for the form are located at this link: https://www.mass.gov/files/documents/2018/01/25/dor-2017-fido-form-2-inst_0.pdf

I am not as familiar with Massachusetts tax laws and requirements but the information should be and appears to be very similar to that required for filing with the IRS.

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Experience: Member at Keefer & Keefer LLC
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