My wife died in May. I have a 1099 from her brokerage account that's in the name and tax ID of her trust. The broker ceased operations in September. So the trust is responsible for the dividends paid May-September, while the dividends January-May actually belong to our joint 1040 tax return. I know how to file a 1099-DIV in which the trust pays those January-May dividends to my SSN for our joint account. But how do I reduce the 1099-DIV I got from the broker, so as to subtract those January-May dividends from the January-September toal shown on the brokerage 1099-DIV? If I simply over-ride the figures, I can't e-file, right? And in any event the IRS knows perfectly well what the broker says it sent the trust.
Perhaps I should create TWO new 1099-DIVs, one in which the trust pays me and the other in which the trust pays itself?
Thanks for guidance!
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As long as you are able to explain the figures and how they were determined, you should be okay.
You should enter the full amount of the 1099 into the trust return. Then the trust can either K-1 or issue a 1099-DIV to send the proper amount of the dividends to your personal return.
Thank you! The K-1 option seems the best, because otherwise I get into so many 1099s (-INT and -DIV from several banks and brokers) and because it's already past time to send to the recipient and getting close to the time when I'd have to report to the IRS. With a K-1 I could simply come up with an interest, dividend, and perhaps capital gain for the same individual (my late wife) while still being easily able to explain the figures if I get audited. This is the first time I've heard of using K-1 for this purpose. (The lawyer, who is a enrolled agent, says NOT to use 1099s for this purpose because it would confuse the IRS; she wants me to adjust the income figures and attach an explanation, but I believe that would mean I can't e-file. And all other help along this line suggests 1099s.) Is there any chance the K-1 could come back to bite me?
As long as you are able to explain the figures and how they were determined, you should be okay.
Thanks!
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