Return for an Estate My mother died on Oct 2. I am the Personal Representative for taking care of her final estate. I have some questions about completing the Form 1041.
Most of her assets were mutual funds in a revocable living trust. There are 3 heirs. With one major mutual fund company there were holdings in 4 different funds. Those were handled by establishing a new account for each of the 3 heirs, then transferring 1/3 of the holdings of each fund to the new accounts. But these questions: The basis value of the holdings of each fund stepped up to the value as of October 2. When the new accounts were established on Nov 5, there were gains in each of the funds that need to be accounted for. Can this be done by calculating the $$ gains and reporting it on Schedule D of the Form 1041 for the trust/estate? As this is a grantor trust, does paying the capital gains taxes in this way remove the requirement for a Form K-1 for each of the beneficiaries? And assuming that this takes care of the taxes due, does not the basis for the holdings of each of the heirs become the value of the shares in each fund as of November 5?
Second issue: There were more holding with another major mutual fund company. Those were handled by liquidating the assets (turning it all into cash), then depositing that cash in a new checking account to be distributed. It took awhile to meet the mutual fund's liquidation requirements, i.e. medallion signature guarantees, copies of trust, so the liquidation was not done until January 6, 2014. The holdings all received dividends and capital gains distributions at the end of 2013, which need to be accounted for in the trust/estate tax 1041 for 2013. Same sort of question as above: Does including the dividends and gains for 2013 in the Schedule B & D, Form 1041 take care of the tax responsibility such that there is no requirement for a Form K-1 to the IRS and each of the heirs? Because the final transaction was completed on January 6, there will be a requirement to account for any gains/losses for the first few days of 2014 on next year's return for the estate?
Finally, the estate's holdings include some real estate: three city lots, 2 of them with houses. One of the houses was my mother's home which has been vacant since she moved to assisted living facilities 5 years ago. While it remained her home, though vacant, various upkeep expenses remained her responsibility and except for yearly property taxes as itemized deductions, nothing was deductible for tax purposes. But now this real estate is no longer a home. It has been cleaned out/cleared out.....and is simply an asset that is on the market. Question: Since this property is now an asset for sale rather than a residence/home, are property upkeep expenses deductible?--i.e. such things as water bills, electric bills, yard maintenance expenses, property taxes? If so, is there an IRS publication that covers the details? |