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

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.

1. Filing requirements
2. Income calculations
3. Income in respect of a decedent
4. Common issues
   1. Stock options
   2. Basis adjustment to covered securities
   3. Section 199A
   4. Marital planning; and
   5. Termination of grantor trust status
5. Available tax elections and coordination with the fiduciary return to decide on available elections

The panel will discuss these and other critical questions:

• What are the filing requirements and determinations for a final tax return?
• What income items must be reported as IRD?
• How does the tax preparer report capital gains income in the case of compensatory stock options?
• What elections may--or must--be made in preparing the final tax return?
• What are the factors to consider in coordinating with the executor or personal representative to determine the tax impact of specific elections such as the Section 645 election?

Learning Objectives

After completing this course, you will be able to:

• Identify the filing requirement and determinations for a final tax return for a deceased person
• Recognize income items that must be reported as IRD
• Discern the elections that may or must be made in the final return
• Develop a checklist to use for coordinating with the executor or personal representative on the tax impacts of specific elections

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex trust and estate tax forms and planning; supervisory authority over other preparers/accountants. Specific knowledge and understanding of IRC 645; familiarity with fiduciary accounting income,

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).