Assets within brokerage account sold after death but reported to decedent's SSN rather than Estate's EIN

[Spurlin]

Received 2019 Form 1099-B.  Date of death is January 02, 2019.  On March 13, 2019, Merrill Lynch sold everything without first transferring it to an estate account.  Now I have a 1099-B for the client that reports sale proceeds of $188k and cost basis of $154k.  The true cost basis should be higher, as it should have been stepped up to the date of death value.  Decedent's estate filed a PA Inheritance Tax return reporting date of death values for these assets, and so the correct basis is known.  The trouble is that when I report all this on the Estate's 1041, nothing is going to be reflected on the final 1040 (which I didn't even plan on filing given the death was two days into the year), and so the IRS is going to wonder why these proceeds were reported to the decedent but no tax return filed for her.  Any advice on how to handle this?  Other than to go back in time and have Merrill transfer the assets to an estate account before selling?  

Thanks!

[Carl]

If the sale date was before the estate was established, then it's reported on the deceased' final 1040 tax return. If the sale date was after the estate was established, then it's no big deal and can (and should) be reported on the 1041 estate return.

[Anonymous_ · Accepted solution]

You can try and get a corrected 1099-B from Merrill Lynch with the estate's EIN, but you will probably meet with some resistance or it will otherwise just not happen.

Alternatively, you could file a return for the decedent reporting that she received the proceeds as nominee for the estate (which she did and will most likely be the most expeditious manner of handling this matter).