After Public Notices were published and no claims were made, the property was sold. My father had Power of Attorney and the total distribution went to my him. My father then distributed the funds to the 4 other brothers. I've entered the 1099s as proceeds from the sale of an inherited property. Where would I enter the amount my father distributed to the brothers?
Generally, an EIN is obtained for the estate and the administrator (or other responsible party) prepares, or has a professional prepare, a Form 1041 for the estate; the beneficiaries then receive a K-1.
In this instance, your father will report that he received part of the proceeds as nominee for the other four brothers (that part will be subtracted from the total reported on his return). TurboTax does not really support nominee distributions for Form 1099-S.
If the home was sold in your dad's name and he got the entire proceeds then the ensuing distributions to the others is NOT entered anywhere on an income tax return. And if he gave them more than $15K per person then he needs to also file a gift tax return form 709 which is not supported by TT.
Through the consult of legal counsel, no estate was created as he had nothing substantive. My thought is to enter the payments as "expenses against the sale" and hope for the best.
The home was sold in my uncles name. The 1099 was issued in my fathers name as the POA.
@LisaKarell wrote:
The home was sold in my uncles name. The 1099 was issued in my fathers name as the POA.
A POA is not effective after the death of the principal; it is essentially null and void. The property would pass by intestate succession.
The distributions were NOT expenses of the sale ... that would be incorrect. What should have happened is that they would all have been put on the deed to the property and then all of them would have gotten a 1099-S for their part of the sale. In any case, after the cost of sale, how much could the property have really netted if it was sold shortly after death ? And since the gain is all long term the tax bill should have been small if any ... you did use the date of death value for the cost basis correct ?
In this situation may I suggest you complete the return without the sale and make note of the refund/bal due then ... add the sale and do the same. See what the difference is and divide it by all the parties and that is what he should have withheld from the distributions he made or how much they now all owe him.