Filing Final Income Tax Return for Deceased Person: Mastering Allocations, Understanding IRD, and More

Description

While the general requirements of filing the return of a decedent are similar to those of living taxpayers, there are unique issues when filing the final Form 1040 Income Tax Return for a deceased taxpayer. From fundamental questions--such as who has the authorization to file a return--to more complex matters, such as allocating income between the individual and fiduciary tax return or coordinating tax elections, tax professionals must know what's required to file a final 1040 return for a taxpayer.

One of the most challenging issues arising out of filing a final tax return is determining and reporting IRD. Any income to which the deceased taxpayer was entitled is considered IRD, and certain classes of income items are deemed IRD.

In addition to reporting issues, there are some tax elections which may be available to survivors and the estate of the decedent, depending on the taxpayer's circumstances. Income tax advisers must coordinate with the estate's executor or the appointed personal representative to determine the tax effects of particular elections, such as the IRC Section 645 election to treat a revocable trust as part of the decedent's estate for income tax purposes. Tax advisers need to be well-versed in post-mortem planning options as part of the process of filing the final income tax return.

Listen as our expert panel discusses IRD reporting, describing basis adjustments that occasionally arise in reporting covered securities, available tax planning options, and other issues relevant to filing a final individual tax return for a deceased taxpayer.