Level 3

INTEREST INCOME REPORTED TO A DECEDENTS ESTATE

Forum|Forum|6 years ago
April 21, 2020
2 replies
1 view

The taxpayer passed away 08/15/19. I am preparing a 1040 and 1041 for the year 2019. Form 1099-INT was received for $80,000 with the taxpayer ID for the Estate. Should the interest income be reported all to the Estate or be split between the 1040 and 1041? If split, do we need to request new Form 1099-INT's be issued?

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IRonMaN

Level 15

When was it earned? If was earned evenly during the year, split it based on the number of days being reported for each return. As a side note, you won't have any luck getting a new 1099 issued. To make myself feel better, I have always attached a note to both returns showing how the interest was split between years. I don't know if was ever read by anyone at the IRS, but I never had to respond to any notices either so it at least worked as a good luck charm.

Slava Ukraini!

sjrcpa

Level 15

Chances are it was earned by the estate since 1099-INT issued to estate.

When the 1099 is issued to the decedent, that's when I typically have to look to see what was earned by decedent and what was earned after death.

The more I know the more I don’t know.

IRonMaN

Level 15

I didn’t notice it was created for the estate. Good thing you came out of the bullpen for that one 🤓

Slava Ukraini!

K

kirkaveryAuthor

Level 3

The interest is paid quarterly. For the first three quarters it was paid to the decedent's checking account. For the last quarter is was paid to the Estate's account. I am thinking about reporting it on a "cash bais" to the decedent and Estate. Therefore the decedents final 1040 will show $60,000 interest income and the Estate will show $20,000 even though the 1099-INT shows the full $80,000 to the Estate's tax ID number. And add a preparer note as you suggested. Does that sound O.K.?

The other option would be to split based on the date of death, 08/15/19.

Recording it all to the Estate does not feel right to me.

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