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Lou, Tax Preparer
Category: Tax
Satisfied Customers: 404
Experience:  25+ yrs Experience Personal Income Taxes - Former DM for H&R Block in California
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My brother passed away in November 2006, intestate, 2 ...

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My brother passed away in November 2006, intestate, 2 brothers and father as only heirs. No fiduciary has been appointed. No federal or state estate taxes are due, although the estate was valued above the state''s small estate limit. His 2006 income tax was filed with income received up to the date of death. The estate had gross income of $100 in dividends paid in December 2006 and $3000 in 2007 ($2000 dividends, $400 W-2 income, $600 interest). We have been advised to distribute the income to the heirs for income tax reporting and not file a 1041 due to the cost for intestate probate. How should these amounts be reported?
Submitted: 9 years ago.
Category: Tax
Expert:  Lou replied 9 years ago.

Thank you for contacting "Just Answer", we appreciate the opportunity to be of service to you.

As long as you have properly filed his final Federal & State Income Tax returns there does not seem to be (based upon the numbers you have provided) a need to file a 1041. You did not mention what state he was living in at the time of his death. It woud be helpful to know that information as well.

You also did not mention the total value of the Estate. That could be a factor.

Customer: replied 9 years ago.
Reply to Lou's Post: State of residence- Texas

Total value of estate $800,000 ($600,000 in 401(k), IRA, and brokerage with designated beneficiaries or TOD; $100,000 real estate; $100,000 stocks, bank deposits, car with no designated beneficiary).
Expert:  Lou replied 9 years ago.

No Texas ingeritance return is required on estates with a date of death on or after January 2005. If the numbers you have provided represent the entire value of the estate there should be no reason to file a Federal Estate tax return either. I am not an attorney so I cannot provide legal advice so you might check with one to be sure that who ever distributes the estate has the legal authority to do so.

The distributions are usualyy reported via a K-1.

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