I am working on my 1040 Federal and State. I am concerned that my and the other beneficaries may be adding information that may not be correct.
We paid an accountant to do my mother-in-law’s Trust 1041 returns. After the accountant did my mother-in-law's taxes, we called the accountant stating that the beneficiaries received a 1099-S. We offered to pay the accountant for the extra work the 1099-S would cause. He sent an email that reads: I am finished with this matter. If the title to the property is in the name of the trust, then the money should have been paid to the trust and distributed by the trust. The return was prepared according and before I had any knowledge of the erroneous Form 1099-S. I am not asking the Community for help with my mother-in-law’ returns. I have trouble trusting the above accountant’s work on my mother-in-law’s return.
The only reason my mother-in-laws return had to be done was to file a final return. The only monies that are involved are the attorney fees and those regarding the sale of her home. The home sold for under $50,000. The amount on 8949, Part 11d (Proceeds (sale price)) and 11e (basis) are the same.
The title of the home is in the name of the Trust. The Title Company did not make out a check to the Trust. The Title Company issued checks to each of the 4 beneficaries. The accountant issued the 1041 K-1 to each beneficary. The accountant did not issue 1041 K-1-T to the beneficaries. The only amounts on the K-1 are 11A (attorney fees) and 11C (commission, closing costs, Fix UP expenses). There is no gain on mother-in-law’s trust return; nothing is owed (a loss).
Erroneous (?) Form 1099-S: So, the accountant is stating the the beneficaries should not have received a Form 1099-S. I called the title company and they said it was correct for them to issue 1099-S to the beneficaries.
The accountant entered on the 1041, Schedule B Line 10 the net amount total that the beneficaries split 4 ways; sales price minus expenses.
Below are my questions regarding the individual 1040 returns I am preparing using Turbo Tax Premier:
Was it correct for the title company to issue me (a beneficary) and the other heirs Form 1099-S?
Should I enter the 1099-S on my 1040 returns?
The 1099-S that the beneficaries received has the gross amount the house sold for divided four ways, before expenses, in Box 2. The total amount of the four 1099-S is different from the amount net amount (sales price - expenses) on the mother-in-law’s 1041, Schedule B, Line 10. What amount should be on 1041, Schedule B, Line 10; the sales price prior to expenses or the sales price after expenses; gross or net?
Should I enter the K-1 on my returns?
Accountant did not issue K-1-T Forms. Should I have a K-1-T? When I work on the Illinois Tax Return, Turbo Tax asks for the information regarding the K-1 filed on Federal. Do I enter the information from K-1 into K-1-T on the State Return.
We have rental properties and I have my individual tax returns completed with the exception of the above. We cannot ask the accountant that did my mother-in-law’s return any questions. I don’t want to go to an accountant for my indivdual taxes because I have worked my way through them.
Thanks
