1099-S received for deceased person

[smarson]

My grandmother passed away in 2012.  At the time, all her assets were in a living trust.  We filed her final 1040, even filed a Form 1045 to carryback losses.  Then the markets blew up, the IRS was basically closed (and unable to be contacted) and the carryback was never processed and the refund never issued.  My father gave up trying to contact the IRS because it took hours each time to get nowhere.

All that aside, we never closed the estate/trust because the trust still owned some property that we were having trouble selling.  FINALLY the property sold in 2019 and a 1099-S was issued with her SSN on it. 

Estates and Trusts are not my specialty and I'm not sure how to proceed.  I know how to calculate the gain/loss on the sale of the property, but I was expecting the 1099 to have been issued to the Trust Federal ID, not her SSN.  I intended to file 1041 for the trust, reporting the sale of the property but with the SSN being used So now I'm at a loss. 

Anyone have any recommendations on how I should proceed with this? 

[BobKamman · Accepted solution]

First, you are probably referring to the 2013 federal government shutdown -- that's ancient history, and not relevant here.

Second, the 1099-S was issued with an SSN because someone in 2019 gave them that number.  

Third, you write "I intended to file 1041 for the trust, reporting the sale of the property."  That's exactly what you should do.  The SSN is not relevant either.

IRS might send a letter to the escrow company, telling it to withhold taxes on any more sales reported under that SSN because IRS knows it was assigned to a person deceased for many years.  If there is any other property left to sell, be more careful next time.  

[smarson]

I only mentioned the IRS shutdown because we filed the carryback, they kept sending notices saying they needed more time to figure things out and basically we never heard back from them.  And they owed us a huge refund of taxes.  But now the statute has run so that money is gone and I'm really frustrated about it.  But yes, irrelevant here. But if you have any suggestions about how to go back and try to get this money, I'm open to ideas!

Thanks for your response to the problem at hand - the sale of the property and the 1099 issued to her SSN.  One more question for you, when I file the 1041 and report the sale proceeds, do I need to indicate anywhere that I'm reporting proceeds from her SSN?  Something like "as reported on XXX-XX-XXXX" so they can match the 1099-S to the 1041?

This was the only remaining asset so we can close the trust now. 

[BobKamman]

@smarson  "when I file the 1041 and report the sale proceeds, do I need to indicate anywhere that I'm reporting proceeds from her SSN?  Something like "as reported on XXX-XX-XXXX" so they can match the 1099-S to the 1041?"

IRS survives by convincing most people that there are enough of them to keep a close eye on all of us.  The fact is that there are fewer than 75,000 of them, and most aren't auditors.  And there are more than 150 million of us.  At least, that's how many stimulus payments they plan on sending out, and those don't even go to people making more than $100K/$200K.  So do you really think they are going to be looking at any explanation you try to make of why an SSN was used when an EIN should have been? 

They aren't even going to look at the return of a 2019 decedent whose survivors sold stock after he died, and forgot to tell the broker that the account now belonged to an estate.  (There's another discussion about that right now on this forum, with a preparer wanting to go through some paperwork gymnastics to balance a 1099-B to a final 1040.)  Just remember, you and 2000 other Americans share 1 employee at IRS, who might be the one who makes the coffee in the morning.  Look beyond the smoke and mirrors, and just keep the work both you and they must do, down to the required minimum.