How do I remove deceased taxpayer post-death dividend income from ProSeries Basic

[RolandJ]

Taxpayer dies OCT 05 with calendar year ordinary dividends, qualified dividends, plus tax-exempt dividends that impact the New York state return.  I want to report the full amount to match the information reporting, then subtract the post death amounts for all three categories.  I have all the correct numbers in Excel but cannot get the software to cooperate.

I've always added two payee lines for the investment firm each year, labeling one with "NY" so I can divide the tax-exempt dividends between NY (NY tax-free) & rest of country (NY taxable) on the corresponding additional dividend information screens.  Now I need to add one more variable, pre & post death.

I tried using the nominee feature on the additional information screen to subtract post-death dividend income but it reduced both ordinary & qualified dividends, both incorrectly.  What does the nominee screen adjust exactly?  Even if correct, I still have the tax-exempt dividends to reduce as well.  I can't just enter another payee line and put in negative amounts, the software doesn't allow it.  There should be a common technique to do this.  Thanks for any suggestions.

[sjrcpa]

I only enter the amounts earned up until death.

I've never had a 1099 matching notice in this situation.

[RolandJ · Accepted solution]

Thank you for your prompt response.  Yes, that gets us to the correct answer so that is what I will likely do.  I can attach a PDF showing the gross (full year) numbers and my allocations to arrive at the correct net reportable Form 1040 amounts, that should avoid future CP-2000 notices.  

However, I believe the software should provide a way to clearly enter the gross Form 1099-DIV numbers and then back out the post-death earnings.  I researched the help materials without finding any reference to this situation.  I talked to tech support yesterday, neither of the two gentlemen I spoke with had an answer.  So, I shall just add an explanation.  

Anyway, thanks again!

[rbynaker]

In the past I've been able to split the entries into multiple lines in order to trick the software into getting the math correct.  The problem (for others who may stumble upon this thread later) is that you may have 4 or 5 entries from a 1099-DIV (Ordinary, Qualified, CGD, 199A, Exempt, etc.) but the software only has one nominee box.

For example:

Merrill Lynch x4567 - Qualified Dividends
1a $300
1b $300
Double-click to details and enter Nominee $60

Merrill Lynch x4567 - Non-Qualified Dividends
1a $100
1b $0
Double-click to details and enter Nominee $10

Presentation on Sch B should be $400 Dividends - $70 Nominee.

Amount on 1040 should be $240 QD, $330 Div.

Repeat the process for anything else you need to nominee.

It's cumbersome and probably not worth the effort.

Rick

[BobKamman]

You're just not as obsessive/compulsive as some people.  What's interesting about this question is that it seems to involve amounts where there is no automated matching anyway:  tax-exempt income split by state.  Who cares?  Just have the workpapers available if the state decides to audit the return.  

Has anyone else noticed that 1099's from Merrill Lynch (really, Bank of America, which is just a name that NationsBank bought) always show the state source of tax-exempt income, on the first page if not in the detail at the back, as the taxpayer's state of residence?  Or maybe it's just the state of the taxpayer's mailing address.