Discussion:Proceeds from a decedent
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Discussion Forum Index --> Tax Questions --> Proceeds from a decedent
| 14 March 2007 | |
| Client's brother passed away last year with no spouse and/or kids. Client is the sole beneficiary, and received $10k from the decedent's brokerage account. Two questions:
1. Are these proceeds taxable to my client? 2. If my client's basis is the basis on the date of death of his brother, how can I determine the basis on the date of death. Brokerage firm is not very cooperative. Thanks!! | |
| 14 March 2007 | |
| I think you need to give more information. Was there no estate? Was there no fiduciary income tax return? Was it a pay-on-death account? Were there stocks/bonds/mutual funds liquidated after death and paid out?
If, for example, the client is liquidating a pay-on-death account, the gain or loss on the stepped up basis is taxable to your client. Standard way of determining date of death value is the average of high and low traded for the day. You can find that information by typing the stock symbol into a search engine and looking for historical prices. | |
| 14 March 2007 | |
| There was no estate and no fiduciary income tax return. The mutual funds were liquidated after death, and paid to my client who was the sole beneficiary. All I have is a 1099-B showing the withdrawal proceeds. CUSIP number or the MF symbol are not shown. Client has no clue, and there are no other documents available. | |
| 14 March 2007 | |
| How was the account titled (John and Jim JTWROS) or (John TOD Jim) or (Just John)? | |
| 14 March 2007 | |
| you may have to have him call the broker if you don't have a brokerage statement | |
| 14 March 2007 | |
| For mutual funds, all you can do is report the net asset value (NAV) reported by the company at the end of the day. You can use something like either Google or Yahoo! finance to find the values if you have the names of the funds. | |
| 14 March 2007 | |
| There are services that will provide a date of death value for securities. The one I use is Financial Data Service. They apply all of the applicable Regs. They're quite accurate and have passed IRS muster on a number of occasions. -- Larry Hess, CPA, Albuquerque, NM - Talk to me | |
| 14 March 2007 | |
| she needs to figure out who owned them at his death to determine whether to do a 1041 or not first | |
| 14 March 2007 | |
| As Keninh5 says, how was it titled? whose ssn is on the 1099-B? | |
| 14 March 2007 | |
| The case appears to say that the brokerage account was owned solely by the decedent and the beneficiary received the proceeds after those assets were liquidated after death. If that is the right scenario, the basis for the sale is the date of death value. For mutual funds you can use the NAV on the prior day since it is the same as the value at the beginning of the day of death for figuring the average. A website I use often is Bigcharts.com. They will provide historical data if you have the symbol and they have a symbol look up service also. The site is free. The hard part is when you have a mutual fund in a company with a lot of funds (like Fidelity) since the symbol lookup feature only lists the first couple of dozen funds.
Once that is done, you've got a regular Sch D transaction to determine gain or loss. | |
| 14 March 2007 | |
| That answer would be different if title was held differently. My point from my earlier question. | |
| 14 March 2007 | |
| The original scenario didn't really tell us if there was a trust or whether this was a directly owned account. If the account was owned by the decedent's trust, then a 1041 filing requirement may be the case, but the description indicated the "beneficiary" got the funds directly from the brokerage account. If there was no trust return required, there would be no K-1. Even if there were a K-1 the capital gain/loss might not be distributed (or distributable).
Bottom line: All the facts are not present to give a definitive answer. BTW ... Sch D is the same for 1040 and 1041 until you get to the distribution questions so data entry for computing the gain/loss is the same. | |
| 14 March 2007 | |
| you can't do a beneficiary from a regular account, only a qualified account or insurance or an annuity. You can do a TOD or a joint tenancy or you can pass it via your will or trust, or by intestancy. So how the brother gets the ownership depends on how the account was titled. So I disagree, CE, the K-1 may be coming from the estate 1041. | |
| 14 March 2007 | |
| 1099-B is titled in the name of my client. It shows my client's SSN as well.
There was no trust - it was a directly owned account with the client as the sole beneficiary. | |
| 14 March 2007 | |
| it's probably semantics that I'm getting hung up on, but who cares? put it on his tax return. | |
