2946546
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Attend our Ask the Experts event about Tax Law Changes - One Big Beautiful Bill on Aug 6! >> RSVP NOW!
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

How do I make an adjustment to the principal paid on an inherited promissory note for an installment sale?

My mom died last August, and I inherited a promissory note for a business she sold in 2011. The note went into probate, and I created an estate account with an EIN to collect the payments until her estate closed.

 

The 1099-INT from the loan servicing agency has her SS# and shows the principal and interest paid for the whole year. As I understand it, I need to report on her return only the principal and interest received up to her date of death. So, I would divide the totals by 365, then multiply by the number of days up to her DoD. Then I enter those interest and principal amounts on her return. The remainders for the rest of the year go on her estate return. Is that correct?

x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

2 Replies
KrisD15
Expert Alumni

How do I make an adjustment to the principal paid on an inherited promissory note for an installment sale?

That would be the way the interest would be reported, however the loan servicing agency should have been given the EIN of the estate to report the interest earned after death on a 1099-INT with the estate EIN. 

 

 

If they are willing, it would be worth getting two corrected 1099-INT to allocate the interest income properly. 

 

Pub 559

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

How do I make an adjustment to the principal paid on an inherited promissory note for an installment sale?

I did give the loan servicing agency the EIN, but it took them two months to direct the payments into the estate account. For those two months, I moved the payments into the account manually, so the principal and interest they have for the EIN number wouldn't match with the amounts she received up to her date of death.

 

I'm planning to report the principal and interest for those two months on the estate tax return. The numbers will be two months off from the EIN numbers, but will jive with her date of death. 

Unlock tailored help options in your account.

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question