Decedent estate - lived in WA, has CA rental property

[Just-Lisa-Now-]

This is going to sound dumb, I think my brain just isn't working right this morning.

TP lives in WA state, has a CA rental property. TP died in September. She been a client for decades and we've always filed a CA 540NR return for the rental since she moved up there.  I will continue to prepare her final 1040 with the 8 months of rental on the CA 540NR.

Executor daughter says she has an accountant up in WA to prepare the 1041, but they told her that couldn't do anything for the CA rental after she passed...I dont know if this means they dont know how to, or that it doesn't need to be done?

Does a CA 541 get filed for this WA estate that has a CA rental property?  

[sjrcpa · Accepted solution]

Does a CA 541 get filed for this WA estate that has a CA rental property?

Yes.

[Just-Lisa-Now-]

Thats what I thought!   I dont understand why this accountant up there is telling her they cant handle that part of it.

Thank you!

[jeffmcpa2010]

They may be a CPA who is unwilling to jump through all the hoops the California Board requirements and get licensed in California even though they never set foot in the state, nor have a client in the state. California doesn't recognize reciprocity with other states CPA licenses. If it is their only client with a relationship to California they may have decided it's not financially prudent to go through the process.

[Just-Lisa-Now-]

I dont think you need anything special to file a CA return if youre a preparer outside of CA. You just need a PTIN.

[Mimbreno]

Is there any chance there was a transfer on death deed for the rental property and it did not pass to the estate?

[joshuabarksatlcs]

ATS: It was because CA FTB threw the WA CPA a curve.  We have 540-NR but not 541-NR.

(ATS = A Total Speculation)  

@sjrcpa's  (non-chatty) comment is right on.  

[Just-Lisa-Now-]

thats what screwed my brain up too, no 541NR.

[joshuabarksatlcs]

Is there any chance there was a transfer on death deed for the rental property and it did not pass to the estate?

Again ATS: The chance is way less than the odds for the 49ers to beat the awesome, unbeatable, totally-favorite-to-win-Super-Bowl-LVI Packers... 

My logic:

1.  The Asker said "Executor daughter says she has an accountant up in WA to prepare the 1041".  If there was a TOD, the WA CPA would likely not file a 1041.

2.  In case of a TOD, the WA CPA should still file 540NR, instead of taking NO action for CA.

(On second thought, I should say WA Tax Preparer, instead of WA CPA.  Again, the "WA CPA" part is also ATS.)

OMG, 49ers already played the Packers?????

[Mimbreno]

I was suggesting there may have been a transfer on death deed for the California rental property, not the entire estate.

[Just-Lisa-Now-]

I misspoke, its not a decedent estate, it was held in a living trust.   

The executor (daughter) is in Canada and eventually the brother (one of 3 beneficiaries) wants to buy the rental from the trust so the sisters can get their share of the money from it (or something like that).   Im really not interested in getting involved in the trust return, my brain just got all scrambled up with the different states and what needed to be reported to CA.

[joshuabarksatlcs]

*** The following comment is solely for my entry to the "Most Sarcastic Opinionator" Award in this forum.  I'm otherwise a nice guy. ***

RE: I dont think you need anything special to file a CA return if youre a preparer outside of CA. You just need a PTIN.

A little brain is definitely more than "anything special".

[joshuabarksatlcs]

Generally, taxable real estate activities in CA are subject to CA reporting.  

One scenario for "NO need for CA reporting" for the trust: immediately after the TOD, the property was converted to a non-rental property (investment or personal use) by the beneficiaries, and was NOT sold before the year end, while the trust had other non-CA assets.  In this scenario, Form 1041 would be needed but NOT CA 541.  But then, this would be off from the "spirit" of the original question.

There are always possible scenarios for every situation.  That's why we have Hollywood.  That's also why the 49es did what they did.  

Billable work is calling.  And I digress.