personal 1040 and 1041

[michele]

Client passed away  in 2019. We do not do other members of the family just his.

He passed in Sept of 2019 and they closed out and sold his invesments in Oct 2019. They just now brought in his information. They never opened an estate or applied for an estate ID# all transactions were then reported under the clients social security number. I know in theory I should be doing a 1040&1041. I guess I am asking do I ask them to go ahead and apply for number and report as it should be although irs will be matching to ssn I would think they would see he is deceased and needs 2 returns. we are not talking about alot of money about $3200 in cap gains and 4000 in dividends. I know this will require them to amend their returns. I just don't think they knew what they were suppose to be doing.  

thx

Michele

[IRonMaN]

Sounds like you already know the correct answer.  Yes, a tax ID number should be obtained and a 1041 should be prepared -------------------- and if the family took the money, some amended returns will need to prepared.

[George4Tacks]

While you meet with them have them complete a W-4  W-7 SS4 and do the application online https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-n...

You will get the EIN at the end of the process. 

A related question is whether the income of the 1041 was distributed to the beneficiaries and if so, when. 

[BobKamman]

If they didn't open an estate, how did they close out the account?  Was it a "transfer on death" account?  If so, wouldn't the transactions after death be reported on the beneficiary's return directly, and not on a 1041?  

How did the $3,200 in capital gains come about?  Was that for the entire year, or just after his death?  Are you taking into account stepped-up basis? 

[Terry53029]

@George4Tacks Do you mean W-7

[George4Tacks]

Of course I do, I was just seeing if the forum was being alert.

[joshuabarksatlcs]

Ironman just wanted to be prepared in case I run into you - do you pronounce it tomaitoes or tomahtoes?

[IRonMaN]

They are tomaitoes to me ------------------- I never have personally come across someone that pronounced that as tomahtoes, but I do lead a sheltered life.

[BobKamman]

I'm not that alert so early in the morning but I think you mean SS-4.

[joshuabarksatlcs]

Alas, sheltered life - probably same for the turtles that got away.

[George4Tacks]

Testing W-2, W-3, W-4,...W-9, SS-1, ...
Is everyone alert out there?
Testing I-1, I-2, ....

[rbynaker]

I remember when paddling out of Boundary Waters we saw a huge snapping turtle sunning himself on a rock in the river.  Seeing the prehistoric beak made me feel like we'd somehow wound up in the Land of the Lost.

[IRonMaN]

You should have tried petting it.  I hear they really like that.  Of course, if you are right handed you probably should try that with your left hand.  

[BobKamman]

Went swimming with them in the Galapagos. 

They're friendly, if slow.  

[michele]

They did not transfer it at death. They just sold everything and used his ssn# and reported everything under his number. They should have done a transfer to them then sold the investments under their id. or gotten an ein for an estate and sold them thru there.  It's always lovely when they don't consult anyone before they jump in and just do and of course they won't want to amend their returns but to me right is right and wrong is wrong.

thx

Michele

[George4Tacks]

It is only the prepares job to point out errors on previous returns. You can not make them do the right thing. Bottom line on what you describe is that there was no intentional fraud and the net tax is essentially the same. Consider letting lying turtles lie and go on with the next year. 

[BobKamman]

How did they manage to sell it?  Did they pretend to be the decedent?  Did they have online access so no human contact was needed?  But then, how was the check made out when they collected the proceeds?  They aren't your clients (except for hiring you to do the final 1040) so it's not your problem, but there are some missing details here.