Estate Income Reported Under Deceased's Social Security

[aseckrater]

My client's mother died in Feb. 2023 and sold her mother's property in Sept 2023. Two 1099-S were report. 50% under the mother's social security and 50% under the Father's social security who died in 2022 or 2021. No EIN's were ever created for either estate. Two questions here.

1. Even though the home was old after death, since the 1099-S was issued under her SS, Can I just report it on her 1040 and call it a day. Either way, no tax will be due. Or do I need to apply for an EIN and file it on a 1041. If so, how do I report it to make sure flags aren't raised for not showing up on her 1040?

2. The father's 1099-S will need to go on a 1041 since he passed two years prior. I can apply for an EIN, how should this be report to identify that the 1099-S was under his SS, but belongs on the 1041?

[sjrcpa]

1. Get an EIN and report on 1041.Don't worry about 1099-S matching for 1040. Never had it come up in death situations. IRS knows she'd dead.

2. Ditto.

[BobKamman]

Maybe suggest to the client that whoever gave the escrow company the deceased parents' SSNs should consult with a lawyer with expertise in criminal tax cases?

No, probably not.  

Follow the money, not the 1099s.  To whom were the checks issued?  Did the house increase in value between the father's death in 2021 and the sale in 2023?  There may be a gain there, taxable to someone.

[qbteachmt]

"since he passed two years prior."

Community Property State, Common Law State, was the title/deed in the name of a trust, was there more than the one child for inheriting? What happened to the father's share all these years? It isn't still the father's, 2 years later. Whoever gave the father's SSN seems to consider Dad still co-owned the house. Is that fact?

Once you determine this, you can pursue figuring out the step up in Basis, whether that is more than just your client, if the 1099-S for the father really belongs to some sibling, etc. Why does any of this matter:

For all you know, Mom was sole owner at the time of her death, and client is not the only heir. But death of Mom in this example means full step up in basis.

[sjrcpa]

I also wonder about the competence of the settlement company/attorney who would do this with the SSNs of 2 dead people.

[aseckrater]

Totally had that thought. Maybe title wouldn't know, but there are attorney fees so they should have caught that.

[aseckrater]

It's a community property state so the mom would have been the sole owner at time of death. Could I just report the full sale on her estate return and ignore the fact that the father's SSN was used?