Use 1096/1099 to apportion nominee income to proper owner (Estate), and enter only pre-death income on Mom's final 1040?

[davidsson]

Playing with Mom's final 1040 I found from entering the 1099-DIV information and nominee information that TT makes calculations projecting Qualified Dividend numbers that are incorrect for my situation.  I do not see any easy way to separate out nominee income numbers for the other income noted on the 1099-DIV.

As Executor, I'd like to instead complete the return for Mom using only the income incurred while she was alive, with only mentioning nominee income as required to make things clear.  The income belonging to the estate (after death) would be sent to the estate with 1096/1099s.

So, in the end, the info on the Mom's return plus the info on the 1099s sent to the estate would equal the total of the 1099s received by the deceased.

I could enter 1099-INT and 1099-B nominee data and not Dividend data, but it seems to me that consistently including all or none of the nominee info on the deceased's return would be better.

This sounds great and would avoid having to work-around Turbotax's incomplete handling of nominee dividend/capital gain income... and minimize my opportunity to mess things up.

Are there any possible negative repercussions from taking this approach?

Would I need to include any kind of note on the return of the deceased stating what I did.

Any other thoughts?

[davidsson]

Bump.  Is this a recommended thing to do?

[davidsson]

Bump again...

[davidsson]

Bump again...?

[DianeW777 · Accepted solution]

Let's start with your question:

As Executor, I'd like to instead complete the return for Mom using only the income incurred while she was alive, with only mentioning nominee income as required to make things clear.  The income belonging to the estate (after death) would be sent to the estate with 1096/1099s.

• Yes, you can and should do that.  Only you know what was earned while she was alive and only that amount should be listed as income on her final return.

You could choose to use the nominee or simply enter the amount that should be included on her return, then include the remainder on the estate return.

There would be no repercussions from reporting this accurately.  Keep all  of your records to show how you arrived at the income for each return.  Apportioning to the proper owner would be a good idea to actually nominee using the forms 1096/1099s without any additional action in the return.  

Nominee information has been provided in your other post and placed here for convenience.

Nominee Returns.

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. 

File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

• On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here: 

• Form 1096
• Form 1099-DIV
• Form 1099-B
• Form 1099-INT

Thank you for your patience.

[davidsson]

Thank you so much Diane.  I was hoping for your input, as the idea came from previous responses from you to others.  I haven't seen other proponents of this method for simplification on this forum.

Thanks again!!