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Best way to report distributed/nominated Income ?

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Latest post Mon, Feb 25 2013 4:13 PM by Taxagent. 1 replies.
  • Mon, Feb 25 2013 2:22 PM

    • Drew
    • Top 10 Contributor
    • Joined on Thu, Mar 30 2000
    • PA
    • Posts 51,431

    Best way to report distributed/nominated Income ?

    Taxpayer A creates JWROS account with major mutual fund house with B, C   all funds from A,  others do not comingle or withdraw. any funds.  A pays taxes like clockwork in her SSN etc,  A passes.

    B and C take the account and split it 50/50 as was A's intent , several months later. Close out account.

    Not even close to a Federal estate tax and all state taxes paid in full ,  A has filed a tax return, all taxes thru DOD addressed/paid   Not a dime of assets in decedents sole name /title --accurate state return as well for decedent

    There are legitimate gains and income  post DOD and not an attempt to end run taxes due.

    Of course all the  1099's come out in  decedants name and SSN.

    What is easiest way to nominate the income 50/  50 to the respective B and C

    A 1098 and detailed 1099 to show where each fund  or line item in original 1099 went?




  • Mon, Feb 25 2013 4:13 PM In reply to

    Re: Best way to report distributed/nominated Income ?

    First, A could not possibly have filed an income tax return himself that accounted for everything up through his date of death. His executor could have filed his final return (if one was needed) to do that, of course.

    Second, B or C should have notified the mutual fund firm of A's death before they took the distribution. Otherwise, how else does the firm know to make the checks payable to B and C, and if B and C got the checks, why is the income being reported by the mutual fund as paid to A?

    The easiest why to deal with this is to ask the mutual fund firm to issue corrected Forms 1099. B and C should, of course, each properly report his share of the mutual fund gains and income received on his federal income tax return. Note that this is NOT a true nominee situation, as A's estate never had control of the distributed funds — A's interest in the account terminated the moment he died. B and C would have been paid directly as the surviving owners of the account. 

    I have no idea why you even mention a Form 1098 here. That's a form for a mortgage lender to report mortgage interest it received from the borrower during the year. That's not going to be applicable to a mutual fund situation.

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