Question regarding how to handle 1099/1040/1041's after a parent's death

The remaining 1099s would ordinarily be reported on the 1041, estate income tax return.

Otherwise, it appears as if you have a good handle on the general procedure, However, since your mother passed in November of 2024, you could file one 1041 which would be both an initial 1041 and a final 1041 (aka a fiscal year return).

For example, your fiscal year 1041 could begin on the date your mother passed in November and end on October 31st of 2025. In that event your filing deadline for the 1041 would be February 16th of 2026.

I am sorry for your loss.

Thanks M-MTax for the information! I'll read up on the fiscal year return

https://www.irs.gov/instructions/i1041#en_US_2023_publink1000285977

I had a follow-up question regarding how to fill out the 1099-B's that my mother's tax return will issue to the estate created upon her death.

- She had some stocks in a brokerage account. After her death, I sold the stocks. The 1099-B that I get from the brokerage will list these sales as if she was still living.

- I realize that these stocks will get a stepped-up cost basis equal to the FMV on the date of her death.

- I read that all these stocks that were sold after her death become long-term with respect to the holding period.

- I'm going to issue a 1099-B from her personal SSN to the estate

My question is:

1) should I list the new stepped-up basis on these 1099-B's in box 1e?

2) should i check box 2 as LT gain?

3) what date should I enter in box 1b? The date of her death?

4) I assume if I have to issue a 1099-B for every stock sale?

Or do I simply copy that portion of the brokerage 1099-B to these "new" 1099's and let the estate handle the changes?

- I'm going to issue a 1099-B from her personal SSN to the estate

Why? You do NOT have to issue a 1099-B to the estate.

I thought I had to issue 1099-DIV, B's etc for the period from her death in November to Dec 31, 2024.

For example, I will note on her personal 1040 that portion of income that occurred after her death even though the 2024 1099's that are issued to her under her SSN will show the entire 2024 year.

Don't I have to create a paper trail that leads to her estate's 1041?

I might have omitted an important item... I sold these stocks in December 2024 after she passed in November ... so the sales will show up on her 2024 1099-B

You can then simply report the sales on her final return and indicate that she received the proceeds as nominee for the estate. 

Frankly, I've had almost identical situations and have just reported sales on the decedent's final return. 

ok, I think I see your point.

It sounds like the easiest way to handle this:

- as you described, list all the 2024 sales on her 2024 1040 as recorded on her 2024 1099-B from the brokerage

- determine the nominee income (stock sales occurring after her passing) and subtract off from her 2024 1040 Sch D

- adjust for the new FMV cost basis and holding period with respect to these nominee stock sales

- issue one 2024 1099-B to the estate with the total nominee stock sale income and note that it reflects an increased cost basis (and thus less taxable gain) and a new LT holding period?

I agree that any 2025 1099's will be handled by the estate and there's no need for me to issue any 2025 1099's for any 2025 1099's that I receive from a bank/brokerage.

That's correct. You would note the basis increase (decrease) on the 1041 if you're filing a return for the estate.

Also, you would show inherited or the date of death as the acquisition date and ensure that, either way, the holding period is long-term.

Thank you!

I have a similar situation to eagleman1.

Mom passed in July 2024. She had a trust which I became the successor trustee and assigned an EIN. The trust consisted of her bank account. I have received a 1099-INT from the bank which contains her SS number. Do I report all the interest from 2024 on her final 1040, all the interest on a 1041, or does the interest get split between the 1040 and the 1041?  

You can split the interest between the pre-death period and post-mortem period. On the other hand, reporting the entire figure on the 1099 on her final return should not cause any serious issues.

I'm sorry for your loss.

Thanks for your help.

I have similar situation as eagleman1 and morlanb. My mom passed in Aug ‘24, has trust (with separate EIN now), and I’m the successor trustee and personal rep of her estate. She has bank accts, a brokerage acct, rental property (townhome not sold yet), and an annuity. I understand from your earlier responses that her 1099-INTs (and assume 1099-DIV) can be reported on her final personal 1040. My questions are:

1) How about her rental property income? Does that need to be split or also ok to report on her final return? If split, how would I handle that because only a single 1099-MISC (under her SSN) was provided?

2) I made withdrawals from her annuity while she was alive for expenses. Those proceeds would go her personal return. Upon her passing, I cashed out her annuity for eventual distribution to beneficiaries. A portion of the distribution is taxable, and the 1099-R was issued against the trust’s EIN. I assume that will need to be reported under the estate’s return.

Thanks for your help!

1. Income should be divided up based on when received, personal or estate. If you still have the rental, it ends up on the estate so you may as well split it correctly. The IRS knows her social and the estate connections. 

 On her final return, you can show a negative number in Line 21  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 Estate YYY, EIN xx-xxxxxxx
10. Amount = -$xxx

TurboTax will transfer this to your Form 1040, Line 21, Page 1. To create the 1099 forms, see: 

• TurboTax article
• General Instructions for Certain Information Returns

2. Yes

@Yueh1 

Thanks so much! Very helpful.

I’ll give it a try and repost if any additional/clarification questions.

I would appreciate your help on 2 follow-up questions. For my mom’s estate return, I am planning to select “fiscal year” (i.e., Aug 1,2024 - Jul 31,2025) and not 2024 calendar year. 
1) Would your response differ depending on selection of the estate return reporting period?
2) Her trust will continue until I sell her townhome and distribute funds to all beneficiaries, so I expect to file one more 1041 after this initial one. For this initial 1041, for the time period of Jan 1-Jul 31,2025, I don’t expect to receive any 1099s from her bank/brokerage firm/property manager until early 2026. Would I generate 1099s using similar procedure you listed to report the interest/dividends/rental income, or another method?

Thanks for your continued guidance!

1. No, the nominee to the estate needs to happen regardless of the time frame.

2. All of those firms/managers should have the EIN listed and be filing the tax forms for the estate for 2025. You should not have to do nominee again.

Best wishes and my deepest condolences.

Thanks for the responses to my follow-up questions. Re: the 2nd one, it’s still unclear to me how I would report any int/div/rental income the estate would receive Jan 1-Jul 31,2025. For the initial 1041, by selecting a fiscal year that runs Aug 1,2024-Jul 31,2025, the return is due by Nov 15,2025. At such time any 2025 1099s reported under the estate EIN would not be generated until early 2026, so how would I report the 7 months worth of int/div/rental income that’s part of the “2024 fiscal year”? I can calculate using monthly bank/brokerage/

property manager statements for Jan 1-Jul 31,2025, but not based on any 1099s. Specifically, a) is there a line on 1041 to report this income based on calculations, or b) do I request an extension, or c) do I submit the return on time and then amend when I finally get the 1099s? 
Thanks for your quick response and continued guidance!

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@Yueh1 wrote:

......by selecting a fiscal year that runs Aug 1,2024-Jul 31,2025, the return is due by Nov 15,2025. 

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File a 7004 and request an extension.

Ok, 1) I assume the extension will allow time for the estate EIN 1099s to be generated.

2) But specifically, how would I report what I split up between the 2024 fiscal year (7 months) and 2025 fiscal year (5 months) when the 1099s are generated for calendar year 2025?

Thanks for your patience and continued help.

You should have monthly statements from the financial institutions (or they should be available).

Yes, the monthly statements will help me calculate the split.

How would I account for the split in TurboTax Business software (or what line of form 1041)?

thanks for your help!