My uncle passed away and had a brokerage account owned jointly with my grandmother. The stock in the account was sold after my uncle's death but the Form 1099-B came under his SSN. My grandmother's return has already been filed. How do I handle this situation? Should I still report the gross proceeds on my uncle's return even though the transactions were after his death? The gross proceeds were about $100k and the gain (mostly LT) was about $43k. (Note: An estate with a federal EIN was opened for him since there was some property he owned by himself (he was never married). This is still in probate.)
@User1218 wrote:
If there was "right of survivorship" then should all of the sale proceeds be reported on my grandmother's return or would it still be split between both her and the estate?
No, if the account were held as JTWROS (rights of survivorship) then your grandmother succeeded to your uncle's share by operation of law (bypassing his estate). As a result, the entire proceeds would be reported on your grandmother's return.
You still need to seek professional guidance and there is the matter of stepped-up basis upon the death of your uncle.
You should seek professional legal and tax guidance for this scenario (one legal issue is how the account was held (e.g., tenants in common, joint tenants, et al).
Generally, though a return for your uncle should be filed and the proceeds reported as being received on his return as nominee for your grandmother and your uncle's estate (assuming there was no right of survivorship).
The estate and your grandmother would then report the allocated share of the proceeds/gain on each of the returns (1041 and 1040).
Again, seek professional assistance.
Thank you. If there was "right of survivorship" then should all of the sale proceeds be reported on my grandmother's return or would it still be split between both her and the estate?
@User1218 wrote:
If there was "right of survivorship" then should all of the sale proceeds be reported on my grandmother's return or would it still be split between both her and the estate?
No, if the account were held as JTWROS (rights of survivorship) then your grandmother succeeded to your uncle's share by operation of law (bypassing his estate). As a result, the entire proceeds would be reported on your grandmother's return.
You still need to seek professional guidance and there is the matter of stepped-up basis upon the death of your uncle.
Very helpful. We will seek a professional. I just want to make sure I understand how it works. If the account was held as JTWROS and she reports it all on her return, does she get a step-up in basis for his half or does she retain the original cost basis for all of the stocks?
@User1218 wrote:
.....does she get a step-up in basis for his half...?
Yes, she does since she is considered to have acquired the one-half from a decedent.