How to reallocate and report 1099 income among deceased, trust, and beneficiaries?

[TaxJungle]

Financial institutions' seeming inability to issue pre-death and post-death 1099's is giving me a massive headache.

THE SITUATION:

     - sole remaining parent (mother) with a revocable trust died mid-year; all investments had her SSN as tax ID;

     - a new EIN was issued for the trust and some accounts switched to that as tax ID;

     - some trust assets were distributed to me (sole beneficiary, trustee of trust, and executor of estate) before the end of the year, entering MY SSN as tax ID.

Since institutions produce 1099's at the end of the year, they use whatever tax ID they have recorded AT THAT TIME.  So now I have end-of-year 1099's with varying tax ID's (my mother's SSN, the trust's EIN, and my SSN as beneficiary) and each of these forms includes income that is both pre-death and post-death.

THE QUESTION:  For each of these 3 tax ID's, how to I "distribute" and report the pre-death and post-death income to the appropriate 1040 or 1041?  My best guess so far is as follows (based on which ID is used on the 1099):

     - Mother's SSN: Report 1099 on her 1040, then issue a 1099 to the trust for the post-death amount

     - Trust EIN: Report 1099 on the 1041, then issue K-1 to pass income on to me as beneficiary

     - My (as Beneficiary) SSN: Report 1099 on my 1040, then issue a 1099 to both her for the pre-death amount and the trust for the post-death (but pre-distribution) amount.

Then, it would seem that the trust's 1041 would have to report these 1099's issued by both my mother and me, then "pass through" those amounts back to her or me on K-1's... all of which seems absurdly messy.  What am I missing here?  Is there a simpler way to do this?

[AmyC]

@TaxJungle you have masterfully grasped the situation. These are the requirements. Your mom's return would report the interest in her social, then nominee the rest of it to the estate. However, if you do not need to file an estate return, you could put it all on yours. The IRS will ask questions if you don't report everything but they are not concerned at all when you report extra income. If the IRS does ask about the estate, you can show that it went on your return so that taxes were paid. I would want your mother's return accurate.

You can show a negative number in Line 21 with the caption, “Distribution to Nominee YYY, SSN xxx-xx-xxxx.”  The negative number on Line 21 will adjust the income of the reported payee to the correct amount.  The reported payee will issue a Form 1099-MISC to the nominee payee for nominee’s share of the distribution. 

You can enter a negative income adjustment with the following menu path:

1. Federal Taxes
2. Wages & Income
3. Less Common Income
4. Miscellaneous Income
5. Start
6. Other Reportable Income
7. Start
8. Other Taxable Income
9. Description = “Distribution to Nominee YYY, SSN xxx-xx-xxxx”
10. Amount = -$xxx

TurboTax will transfer this to your Form 1040, Line 21, Page 1.

You can e-file with this approach because the disclosure is on the face of the return at Line 21. 

If you are already filing 1099 forms, the more the merrier- so it really doesn't matter and you can nominee to everybody correctly. I am very sorry for your loss and truly wish you the best with this mess.

[TaxJungle]

Thanks for your very thoughtful reply, AmyC.  I was afraid it might be this complicated.  Not sure I followed everything in your answer, but will dive in and follow it through step by step.  More "fun" ahead - it's not like I put this off until the last minute or anything.  🙂