Confused on what to do w/ deceased mother's 1099-C

[SJTaylor999]

Hey all! Here's my situation. My mother died April 2020. Had nothing to her name except credit card debt and a home. I am the executor. Home is being put into my name but nothing more is being done. 

I sold some things of hers and used that money to pay the credit card debt, but it wasn't enough to cover it all, hence the 1099-C(debt was $5400 and I was able to gather and pay about $3800 for the estate). So now that difference is being treated as income for my mother. There was no other money distributed to anyone for anything from the estate, zero balance right now.

Step-father took care of filing her final tax return when she passed and I have not had to file any returns for the estate until now, tax year 2022. What do I do? There is no money left in the estate, like I said it was all used for this debt. I'm clueless how to file this. I do have a EIN for the estate just don't know what to do.

[DMarkM1]

You would report the form 1099-C as other income on the form 1041.  You have $1600 of income it would appear.  There is a $600 exemption and you can deduct expenses for any property being dealt with in the estate.  For example, the cost of ownership for the home before transferred to you.  These items include but are not limited to, condominium fees, insurance premiums, maintenance and lawn services and insurance costs.  Other expenses incurred merely by reason of the ownership of property may be fully deductible under other provisions of the Code.  

Other deductions for the estate would be court costs and fees, cost of certified copies of the death certificate for example. 

Costs incurred when selling property (advertising, supplies, dry cleaning/laundry of any clothes sold, etc).   

Generally, any cost the estate (executor) paid that would not have been incurred were the property not in probate. 

If there is any leftover income then it will be listed on the form K-1 distributed to any heirs to the estate.  

I surmise there will not be any income to be distributed and thus nothing taxable.  

[Anonymous_]

I agree with @DMarkM1 on these facts.

The worst case scenario, @SJTaylor999, is that the estate has zero ($0) deductions and the full $1,600 is taxable as miscellaneous income (reported as other income on the 1041). 

In that event, the estate still has the $600 exemption which leaves taxable income of $1,000 and a total tax liability of $100 (10% of $1,000). At that rate, you are most likely better off paying the $100 and filing the return without issuing K-1s.