Estate Filing

[dsomerton]

Hello, My Mom Passed away 1 April 2020. Through Probate court i was made administrator and her house was sold while it was still in Probate so the house title was never in my name. I have received a 1099S from the title company and just need to know if I am required to file an estate taxes. There shouldn't be any capital gains and the property never generated any income since it was my moms primary home and not a rental.

[tagteam · Accepted solution]

If an EIN had been obtained for the house and the estate sold it, then an income tax return should be file for the estate (Form 1041) and the gain or loss passed through to you as beneficiary. 

There may be no gain but, if a beneficiary (or family member) did not use the house after your mom passed (i.e., there was no personal use), there may be a capital loss after selling expenses that could be used on your personal income tax return.

[dsomerton]

Thanks. I got another Question.  When I goto the deductions of the 1041 what deductions can i Claim?  example Attorney Fees for Probate, Property Taxes paid during closing and Court Fees.  if im allowed to claim these then that would put me at -22,895 (loss) but the other issue is these services were rendered in 2020 except for the final court date which will be at the end of April  2021to close probate but I have not paid my attorney yet until probate is concluded. Could I use those deductions even though I haven't paid yet but services were rendered in 2020. Thanks

[tagteam]

You could, conceivably, adopt a fiscal year since you will be filing your first (and also final) 1041 for the estate. 

For example, you could adopt a fiscal year that ends on March 31, 2021, which would give you until July 15, 2021 to file your 1041.

Further, although I would not personally recommend it, if you maintain your books in a like manner, you could adopt the accrual method of accounting. 

Regardless, the final year deductions (if they result in a net loss) can be passed through to the beneficiaries on their K-1s.

[dsomerton]

The IRS states it can be paid or Incurred charges in 2020. the probate and attorney fees would be considered incurred charges