Form 1041 how do I claim estate income and expenses if paid out of pocket

[vze56v6x]

I posted a few questions but perhaps I am not being very clear in what I am asking. So I apologize and will try to explain below.

mom had a 2 family home where one unit was owner occupied and one unit collect s rent. When mom was alive she also collected social

security which helped offset the home expenses like property taxes utilities and repairs. When she passed of course social security stopped and we only had the rent coming in which sometimes was not enough for things like property taxes.

The bank accounts were all joint so when she died we removed her name (as per bank direction) and we left all utilities being direct debited from any accounts that were already set up.

The  rent was collected but paid to me not my mom so I had to deposit the check into what was formerly our joint checking account and from there I paid for expenses ( like house clean and junk removal, repairs, painting , utilities and property taxes.).

my point is nothing went into the estate and as per our attorney since I was the only one inheriting ever thing and the executor I didn’t need to really worry about the estate account.

i probably would not have setup

an estate but because one bank account had $800 and was only in my moms name I needed to setup the estate to create an estate bank account and move that money into it.

my question having said all of the above is since I paid for everything out of a non estate bank account (but rather a personal account) and the rent was made payable to me, do I still put this under the estate ?

i don’t think I can claim

any of this on my personal taxes because I didn’t own the house. The house was always in moms and dads  name (both deceased) until we sold it.

I would assume I would still report everything on 1041 regardless of what bank accounts were used to pay any of the expenses.

am I correct?

sorry I know I have posted a lot but I am probably confusing folks in what I am asking. 

[Anonymous_]

The estate (apparently) owned then house and would be required to report any rental income and entitled to deduct rental expenses (including depreciation). 

If you paid out of pocket, then the estate should reimburse you for your expenses and claim those expenses on the 1041. 

So, yes, you are correct in your final analysis.

[richlyntek]

thank you but how would the estate reimburse me if there is no money in the estate. Can we assume that its all part of the inherited proceed from the sale of the home? I just want to be sure there is nothing extra that needs to be done except reporting it all on 1041.

[Anonymous_]

It would be a liability of the estate which would typically be shown on the final K-1(s) as an expense that can be passed through to the beneficiary(ies) - assuming there are insufficient proceeds for reimbursement.

[richlyntek]

is there impact if this not reimbursed to the person who paid it?  I am just not understanding what to do here.

[Anonymous_]

It would be the estate's liability to reimburse you for the expenses that the estate should have paid. This could be considered on the order of a loan from you to the estate. As a result, you could enter the expenses on the estate income tax return (1041) which should create a "loss" (in the form of a deduction that would be passed through to you on the final K-1).

[richlyntek]

so by passing on the final K1 to me that means when I do taxes in 2022 it would serve as a deduction on my end?   Am I totally off? just trying to make sense of it...in my head this is how i reason it but not sure I am correct

[Anonymous_]

That is correct. You would (should) be able to use the deduction on your 2022 income tax return (1040).

Note that you would likely have to itemize on your Schedule A.