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I am filing Form 1041 for a decedent's estate. The individual passed away in 2008.
The estate has its own FID# and has about $4,000 of interest income and a $22,000 short-term capital loss on stocks sold.
All of the estate assets have been distributed to the beneficiaries except for about $4,000, which is still in the estate (as of 2//20/09).
Based on this, can the 2008 Form 1041 be the initial and final tax return?
Also, if it isn't the final tax return, should the income and capital loss be taxed on form 1041 or be distributed to the beneficiaries for 2008?
Thanks.
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Power Member
Group: Forum Members
Last Login: 2/16/2010 6:30:43 PM
Posts: 144,
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| First, I'm surprised at the short-term capital loss. Did the estate buy securities after the date of death and then sell them before year end? With the current economy a loss isn't surprising. Since all of the assets are revalued as of the date of death and automatically have a long term holding period, I would have expected long term losses. Anyway, if it's the final return - the income and loss can be distributed to the heirs using Schedule K-1. If it's not the final return, only income can be distributed and the capital loss will be retained in the estate until the final return. Often when an estate is closed, the executor will "hold back" a dollar amount for contingencies. In those cases, they will file a final return. If this is a probate estate, generally the estate remains open until the probate is closed - is that your situation? If you've distributed the assets, it sounds like the probate has closed. Even if you've filed a final return, if subsequently there is more than $600 of income ($100 for a trust); a return must be filed.
Mary Kay Foss
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