You may need to file:
- Form 1041 for the estate.
- Foreclosure yields 1099-A which shows the outstanding debt and fair market value. The house has a stepped up basis to the FMV on the date of the grantor's death. You could have a loss.
- Sch D - report a gain or loss on the foreclosure
- Sch 706 may be required for generation skipping
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