1099-DIV for an estate, pre- and post-death amounts, multiple dividend types

[JimboK]

My father died in November and I am doing his final 1040 in Turbotax.  His 1099-DIV includes amounts for the entire year, but the investment company won't issue corrected 1099s that break out pre- and post-death amounts.  They did provide a history report listing all transactions between the date of death and the end of the year.

 The 1099 boxes in question are listed below with the 1099 values and the after-death values determined from the history report.

• Ordinary dividends (box 1a): $8,302 total, $3014 after death
• Qualified dividends (box 1b): $8,151 total, $2875 after death
• Section 199A dividends (box 5): $137 total, all after death

There are amounts in box 11 ($3,679) and box 12 ($473), all paid before death.  There also is an amount in box 2a ($3,989) that was paid after death but I think I have that handled via a manual override on form 8949, part II.

When entering the 1099 in TT I also entered a nominee distribution of $3014 to account for the dividends that were paid after death.  But schedule B shows an amount of only $2035.82 subtracted out for the nominee distribution.  (Not sure where the $0.82 comes from when I’ve entered only whole numbers.  Presumably it’s doing a calculation of some sort but I can’t figure out where or how.)

It seems that TT prorates a nominee distribution based on the amounts for each individual dividend box, but how does it do it and does that explain the discrepancy?  Frankly, proration seems a bit arbitrary given the differences in tax handling among the boxes and the fact I need to account for specific values in specific boxes (but not all of them) in documenting nominee distributions.

Most importantly, how do I make it right in TT?  Manual overrides on schedule B and the 1040?  Something else?

And for the TurboTax folks: Why doesn't TT allow for separate nominee distribution entries for each applicable box on 1099-DIV?

Thanks in advance!

[Anonymous_ · Accepted solution]

I suspect you will have to override.

I entered your figures on a test return and it appears as if the capital gain distribution figure (Box 2a amount) is throwing the computation for the nominee distribution out of whack (for some strange reason).

Regardless, I was able to override the figure directly on Schedule B (input "-3014") without any issues. Further, I discovered that the return passed the error check with no flags, despite the fact the override appeared in red.

[JimboK]

Thank you very much!  You're exactly right about the box 2A figure computation .  After poking around some more among the various documents that TT generates, I found an explanation statement for Sch D, line 13.  It lists the full $3989 distribution from the 1099-DIV, then on the line beneath that it lists a nominee distribution of $978.18.  That explains the math of the original TT calculation of $2035.82. 

This seems to reinforce my belief that a proration of the nominee distribution based on the values in individual boxes on 1099-DIV is a flawed process.  

So please confirm that my approach for reporting nominee distributions is appropriate: override the $2035.82 on Sch B with $3014, and override Form 8949 by adding a line in part II that subtracts the $3989 as a nominee distribution.  Then I see I need to review all linked forms and worksheets to override other relevant lines (like Sch. D, line 13).

[Anonymous_]

@JimboK Your approach appears to be correct, particularly with respect to the Schedule B treatment. Also, the 8949 treatment is correct (as an override) because TurboTax does not support 1099-B nominee distributions.

[JimboK]

Thank you once again!

A quick follow-up: For the 1099 and 1096 I submit for the nominee distributions, should I use the one for 2019 tax year (the year of the 1040) or for 2020 (when the nominee distributions are reported via the 1040)?

[Anonymous_]

The tax year during which the distribution is considered to be made per the 1041 (i.e., the ending date for the estate's tax year).

[JimboK]

Thanks yet again.  And sorry, I meant the estate's 1041 -- that's a typo.