How To Report Bond Interest On Descendent 1040 Tax Return Instead of The Trust 1041 (1099-INT Issued to Trust EIN)

[SaveMeSomeMoney]

I'm the successor trustee to a trust my mother established. She pass away in Aug 2022 and I cashed in savings bonds within a few weeks of her death. The bank that cashed the bonds issued a 1099-INT to the trust using the Trust EIN, not her SSN.

I'd like to claim the interest under her final 1040 tax return and not on the Trust's 1041. I can calculate the accrued interest up to the date of death, and for the short period after death to the date of sale.

How do I do that? I don't see a way to adjust and explain the amount on the 1041.

Per  IRS Pub 550, this should be allowed. "The surviving spouse or personal representative (executor, administrator, etc.) who files the final income tax return of the decedent can choose to include on that return all interest earned on the bonds before the decedent's death. The person who acquires the bonds then includes in income only interest earned after the date of death."

How does one "choose" to report interest reported to a trust EIN on the descendant's personal 1040 using their SSN?

Thanks in advance!

[Anonymous_ · Accepted solution]

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@SaveMeSomeMoney wrote:

How does one "choose" to report interest reported to a trust EIN on the descendant's personal 1040 using their SSN?

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That would not be a choice you could make without creating a mismatch between the trust's EIN and your SSN.

One scenario would be to report the income on a 1041 indicating that the trust received the income as a nominee. However, that would more likely than not be improper, not to mention more trouble than it's worth. 

The method that is least likely to cause any issues would simply be to report the income on a 1041 and pass it through to the beneficiary(ies) on the K-1(s).

[SaveMeSomeMoney]

Thanks, that pretty much the conclusion I've come to as well.

I do think it's possible, but not worth the risk/trouble.