Deceased father got some 1099-Div

Forum|Forum|4 years ago
March 10, 2022
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My father passed away in Dec 2020 I filed his final tax for 2020. Question is in regards to dividend income in 2021, before several accounts were moved about.

It took until April 2021 to set up the new account at the brokerage to move the Trust assets from my father's Trust account. The new account is still his Trust but I am trustee and it has a new Tax ID number. His Trust account had some paid dividends prior to the transfer. The brokerage prepared 2 1099-Div, one for each account, but one for Jan -April timeframe is under my father's SSN

Additionally, The same thing happened with several drip accounts that would have needed to go to an estate account and TIN since they were not held in the trust and had to be probated, but actually all the Dividends were paid to his SSN.

I understand I need to file 3 taxes, 1041 for trust with K1 to me, 1041 for estate with K1 to me and of course my taxes. I'm just not sure how to account for the 1099's in his name and SSN, it is about $17k total in taxable dividends.

GeorgeM777

Level 11

It appears you may have to amend your father's final return. According to the IRS, if an amended Form 1041 must be filed, use a copy of the form for the appropriate year and check the “Amended return” box. Complete the entire return, correct the appropriate lines with the new information, and refigure the tax liability. On an attached sheet, explain the reason for the changes and identify the lines and amounts changed.

If the amended return results in a change to income, or a change in distribution of any income or other information provided to a beneficiary, an amended Schedule K-1 (Form 1041) must be filed with Form 1041 and a copy given to each beneficiary. Check the “Amended K-1” box at the top of Schedule K-1 (Form 1041).

@John1204

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wp6410

Level 2

His final return is a 1040, not a 1041. The 1041 is for the estate. If the dividend accrued after his death they cannot go onto the 1040{ammended}.

You can try to have to e the financial institution change the TIN. Though the IRS 1041 states that the estate TIN "MUST be used." The Merrill Lynch broker for my mother's estate says they can't... He says that for everything.

Solutions I've been given all include the divends should be recorded on the estate's income(1041).

1. Just do it and respond if it's questioned by the IRS

2. Send an explanation with the return

3. Create a 1099-div from your father's name/soc number to the estate/TIN as payeewith a 1096. No one knows what will happen since SSN is inactive, then the original was sent to an inactive SSN. (this would be the method if the original payee were filing. You would then record the 1099 with adjustment: Nominal.)

BobF4141

Level 2

Unfortunately, from recent experience, brokerages will NOT re-issue a current year 1099 due to their misreporting under a SS# for a taxpayer who died the previous tax year, even when they've known the date of death for months. If the account went to an estate, I've had CPAs tell me to just report it on the estate return. If the IRS questions it, write a letter and explain. Most investment companies will report under the deceased's SS# until the date the account is transferred to the estate, a TOD beneficiary, or trust. If there are multiple beneficiaries of the account which are transferred at separate dates, they will continue to report the un-transferred portion under the SS# until it is transferred. They simply do not care and according to FINRA, they aren't required to correct a 1099 incorrectly reported that way. Companies that issue K-1 packages for PTP (publicly traded ptshps) are sometimes more accommodating, if you catch the error before they file the final partnership or LLC return to the IRS.

I am dealing with a situation very similar to yours, but with multiple brokerage accounts some of which hold PTPs, multiple TOD beneficiaries, a probate estate, a trust and different transfer dates for each. The only saving grace is the death occurred on the last day of 2020 and no need to allocate income pre- & post-death for 2020.