1099-C received after filing deceased final return, assets poured into irrevocable Trust after passing.

[rswelter]

Mom passed in 2023 with a Declaration of trust and a will to pour over into the trust.  I Already filed the final return for 2023. Just received a 1099C (in Moms name) in Jan 2025 for the tax year 2024. All assets have been distributed or poured into the trust.

Do I need to file a 982 for the 1099-C?

Can I ignore the 1099-C and just file the 1041 for the trust?

How do I determine the tax year of the trust and when trust taxes are due?  

Thank you very much everyone for any help!

[MaryK4]

It depends- you may (probably) have to include the 1099-C as income for the trust.  You can decide what you want the tax year of the trust to be- it is easiest to use a calendar year but there may be reasons you would use a different tax year.  Estates or trusts must file Form 1041 by the fifteenth day of the fourth month after the close of the trust's or estate's tax year.

[rswelter]

Since the 1099-C was received after probate was closed and the estate itself has no assets, can I not claim insolvency with a 982?  Any assets were already placed into the trust.

thanks, 

[RobertB4444]

That's a legal question and you might want to consult an attorney if you are going to say the estate is insolvent because it moved all of its stuff into another name.  

@rswelter 

[M-MTax]

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@rswelter wrote:

Since the 1099-C was received after probate was closed and the estate itself has no assets, can I not claim insolvency with a 982?  Any assets were already placed into the trust.

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I agree with RobertB4444. Part of your responsibility as administrator/trustee was to wind up the affairs of the estate, including the trust. Doing so entailed settling all outstanding debts, which clearly existed, prior to distributing cash and property to the beneficiaries.

You should consult local legal counsel and/or a local tax professional for this matter at this point.

[rswelter]

After doing more research, I think you're correct that claiming insolvency is more complicated.  Is the 1041 the correct form for the estate to file? the 1099-C has mom's SSN is that still the correct number to use or would the trust EIN be correct.

Also would the state SC need a 1041 as well?

thanks again every one.

[DianeW777]

Yes, Form 1041 is filed and Form 1099-C is included with the estate return. The Form 1099-C would be part of the estate tax return because it was received after death.

The fiduciary of a resident estate or trust must file a South Carolina Fiduciary Income Tax return, SC1041​, if the estate or trust: is required to file a federal Fiduciary Income Tax return for the taxable year. had any South Carolina taxable income for the taxable year. had a beneficiary who is a nonresident.  

You can nominee the 1099-C to the estate. 

Nominee Returns.  This is how the IRS knows what you are doing.

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. 

File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

• On each new Form 1099, list your deceased mother as the payer and the other owner (estate), as the recipient. On Form 1096, list your mother as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here: 

• Form 1096
• Form 1099-C

As indicated, this could be complex and seeking advice from an estate tax professional would be best by our tax expert @RobertB4444.

@rswelter 

[rswelter]

thanks Diane and Robert,

one last follow up,

Funds are now in the trust account because the house sold that was held in the trust,   Cant I just file the 1041/SC1041 and pay whatever is due in lieu of the red 1099's? before I distribute the funds per the trust instructions?

All of you have been very helpful. 

[M-MTax]

@rswelter 

You can enter the figure from the 1099-C on Line 8 of the 1041 as Other income and provide a description (although the IRS has never released guidance on how to report this type of IRD on a 1041).

Personally, I would file the return by mail and include a copy of the 1099-C.