Estate File or Not Form 1041

[n6075p]

My wife's mother passed away in July 2017. Her mother's only income was a small amount of Social Security. My wife was named the Administrator The Estate. The final Probate court date was in March and she was discharged as Administrator. She only had the sale of a house in December 2017 for about $100,000.00 There was $5,000.00 in a checking account which was used for paying expenses. There was no stocks, Bonds or any other revenue generating items. There was a final personal tax return filed on her behalf in February 2018. We are getting conflicting answers no matter who we ask, or Google online. So...Our question is...Please, If there was no income generated out of the estate. The proceeds, after all expenses were paid was divided equally between two Heirs. Does my wife have to file an estate return 1041?

[bobweissman]

If the estate received tax documents (e.g., forms 1099) showing income of at least $600, then Form 1041 is required. The estate cannot simply disclaim the income because the proceeds went to the beneficiaries. Those payments of income from the estate to the beneficiaries must be reported via Schedules K-1 of Form 1041.

[n6075p]

There has been no 1099's received. There was no income. The one and only home was sold. Does that count as income that you must file a 1041? Thanks for taking the time to answer me. I am just confused because when I think of income I'm thinking rent and interest and definitely none of that in my situation.

[bobweissman]

If the home was your MIL’s residence, and you received no form 1099-S, my opinion is that no 1041 is required. If the home was an investment property, then the estate would have to report gain from the sale, if at least $600.