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I am administrator of my cousin’s estate. I’m seeking advice…

I am administrator of my...
I am administrator of my cousin’s estate. I’m seeking advice on the requirements for filing her personal income tax and her estate income tax. The specifics are She had been living in her parents’ home in Connecticut and caring for them until their death. She sold the Connecticut home in 2017 and then paid cash for a home in Florida. She moved in April 2017 and died two weeks later on May 7, 2017. She was 62 years old. She did not work, drive a car or have health insurance. She was living off of the inheritance from her brother and her parents. Her ONLY income for 2017 was less than $100 of bank interest. I sold her Florida home in March 2018. Additionally, she will be receiving a distribution from her deceased brother’s IRA account of approximately $9000 next month. This distribution will close that account. The finalizing of her approximately $500,000 estate should occur this year, 2018. From research, it is my understanding that since her income was under $600 in 2017 she is not required to file a federal or state income tax return. Please concur and/or comment on this. As for her estate income tax, it will have less than $100 of income, she will fall under the exemption in selling the house but I am not sure on how to handle the taxable event from her brother’s IRA account. I understand that the estate income tax can be filed within a year of her death. This gives a deadline of May 7, 2018. Please provide information on how to proceed with the income tax issues that I have presented as well as any other tax issues that I’m not aware of. Thank you Paul
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Answered in 6 minutes by:
3/19/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,139
Experience: Taxes, Immigration, Labor Relations
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You wrote - Her ONLY income for 2017 was less than $100 of bank interest - that actually means - you are not required to file her final tax return - because her income was below her filing threshold.

However - you may choose to file while that is not required. Your understanding is correct.

Then - I sold her Florida home in March 2018 - that sale transaction is reported on the income tax return for her estate - form 1041 - but because that asset is passed as inheritance - you will use stepped up basis - and will not have any gain.

Still reporting is required.

Additionally, - she will be receiving a distribution from her deceased brother’s IRA account of approximately $9000 next month. - that will be taxable income and will be included into form 1041.

So far we still have to file form 1041.

Let me know if you need any clarification.

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Customer reply replied 4 months ago
Your answer was clear.
please comment on when the deadline is for her 2018 estate income tax return- filing of the 1041

If she passed away on May 7, 2017

you have a choice to select the tax year for the estate

-- If may be a calendar year - ended Dec 31, 2017 - in this case - the due date is April, 17, 2018

-- Or you may choose calendar year - ended on April, 30, 2018 - in that situation - the due date is August, 15, 2018 (he 15th day of the 4th month following the close of the tax year).

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,139
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 4 months ago
Excellent
Thank you
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