My father passed away in 2019. The probate attorney stated we could wait until close of probate to transfer his stocks (due to covid, final distribution has been pushed out to 2021). His 2020 investment income is reported under his SSN rather then the trust TIN. Do we have to issue 1099-DIV between him and the estate, or is there a workaround on Form 1041?
To complicate this further, the fiscal year ended in August 2020, so I also have the task of allocating income to the applicable periods. Unless I am missing something, the IRS does not make filing 1099s very easy for individuals, and I would have at least 10 forms to correct/file. Thank you for any insight you can offer as I continue to research!
No, you do not need to issue 1099s between your deceased father and his estate.
It is a common situation for an estate to receive a tax reporting document issued under the decedent's name and ssn if the payer of the 1099 did not have the name and federal ID # of the estate to issue it correctly. You could contact them to see if they will reissue under the estate name and EIN, but it may not be something they will want to do anyway,
If IRS has questions, they may send you and/or the estate a letter of inquiry, which you will need to respond to and explain what happened so they can follow it.
Sorry about your loss but the 2020 income shouldn't have been reported under his SSN if he died in 2019. That income should have been reported under the trust TIN. Anyway, you need to report the income on the 1041 because his final return was probably filed in 2019. If this is questioned, you'll have to explain what happened.
Thank you! I am aware this income needs to be filed on the 1041, as it should have been income reported to the estate. My question though, is do I need to issue 1099s between my father as individual and the estate?
No, you do not need to issue 1099s between your deceased father and his estate.
It is a common situation for an estate to receive a tax reporting document issued under the decedent's name and ssn if the payer of the 1099 did not have the name and federal ID # of the estate to issue it correctly. You could contact them to see if they will reissue under the estate name and EIN, but it may not be something they will want to do anyway,
If IRS has questions, they may send you and/or the estate a letter of inquiry, which you will need to respond to and explain what happened so they can follow it.