1099-C for 1041

[pggolf]

I am the trustee of my mother's estate. She passed away in Feb 2018. I completed a tax return for her using TurboTax Download Software last year. In 2019, she had one last credit card debt forgiven, and I received a 1099-C. From what I read on TurboTax, it said for me to download TurboTax Business to file a 1041 for the trust and include the 1099-C info. However, I am on TurboTax business right now and there are no 1099-C forms. Feel like I should just get a refund on the software and just have HR Block help me. 

What is the correct process here?

Thanks

[Anonymous_]

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@pggolf wrote:

What is the correct process here?

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It should probably be reported as Other Income on the 1041.

See https://proconnect.intuit.com/community/help-articles/help/reporting-form-1099-c-on-form-1041/00/387...

[Steve2024]

I had a similar problem.  I bought the business version of Turbo Tax because i am the administrator of an estate.  I have three 1099-c associated with my filing a 1041 (estate).  I am unable to find the form and the instructions I am following do not work.  Can i get some help here?

[Critter]

FIRST look at the 1099-C ... whose number is on those forms ?   The estate's EIN  ?  Or the decedent's SS# ? 

[Steve2024]

The number on the 1099 c is the decedents SSN and not the EIN.

[Critter]

Good ... there is NOTHING you need to do with them ... the taxpayer is dead and doesn't need to file any longer.   Those forms are just for the businesses who had to issue them to properly remove the unpaid balance dues from their books.  Pitch them in the garbage if you like. 

[jtax]

Can you state the authority for the proposition that the estate has no filing requirement for the forgiveness of debt because the 1099-C was issued under the descendant's name/SSN? Why isn't this just IRD (income in respect of a decendant) See https://www.law.cornell.edu/uscode/text/26/691

What is on an information (or whether one is even received) has nothing to do with a taxpayers duty to include the correct income on their return. The correct taxpayer must file for the correct income.

This seems to be a legal issue, possibly decided by state law. If the estate owed the debt and that debt was forgiven, then it would seem to be the estate's forgiveness of debt income.

However, there are exceptions to the normal rule that forgiveness of debt is income. One that might apply here is insolvency. See https://www.irs.gov/taxtopics/tc431 (scroll to "EXCEPTIONS to Cancellation of Debt Income").

Perhaps the reason the debt was forgiven is the estate was had no money to pay the debt (after the statutory priorities debts were paid, e.g. funeral, lawyers, probate fees).

[Steve2024]

Thanks for your detailed response.  Very much appreciated.