Technically, that presents a problem because now a Form 1041 must be filed to report the receipt of the proceeds of the sale while still owned by the Estate. Practically, if this is a small amount [the gross proceeds], there is a lower likelihood of an IRS inquiry and you and the other beneficiary might be able to simply file the sale and the gain yourselves. However, the technical fact still remains.
The Form 1041 for the Estate, if filed, would report two events. assuming no other assets:
- Sale of Investment Asset - with Cost Basis the value on date of death and date of Acquisition = "Inherited"
- On Schedules K-1, distribution of the gain, or loss, to the beneficiaries in proportionate amounts.
@doublebzz11 If you need assistance relative to Form 1041, come back.
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