What is the name of your state (only U.S. law)? North Carolina
The estate is settled and only needs to file the final return of the deseased and the estate return. In administering the estate that started out under water some credit card debt was negotiated and settled for an agreed to amount. I am now as the administraitor receiving the 1099c forms for the income of the canceled amount of debt from several card companies. These are addressed to the deceased and not the estate of the deceased. Where is it proper to report the income? Would this be income to the estate or to the deceased individual. In negotiating the debt after the date of death the income seems to belong to the estate and not the individual income but the debt was created by the individual. I do know that if an individual who recieves 1099c can prove insolvency at the time of the debt cancellation then this income does not have to be included as income on their tax return to the extent that they were insolvent. My question here is twofold:
1. Is this insolvency treatment available to estate tax returns?
2. If so then how do you figure the assets? The house passed intestate to the father outside the probate estate and was not part of the estate. The pension and 401k accounts passed directly to named beneficiary outside the probate estate. I know that these assets would be used normally to calculate insolvency if the deceased were still alive and recieving these 1099c forms since they would be assets to pay the tax liability if needed. The estate however does not have access to these assets and was insolvent to the extent of the canceled debt. In so many words the estate doesnt have excess funds left over to pay the tax on this if it becomes income to the estate. This being the case it would seem to me that the estate would not have to show this as income.
Is this correct? If not please advise how this matter should be handeled.
The estate is settled and only needs to file the final return of the deseased and the estate return. In administering the estate that started out under water some credit card debt was negotiated and settled for an agreed to amount. I am now as the administraitor receiving the 1099c forms for the income of the canceled amount of debt from several card companies. These are addressed to the deceased and not the estate of the deceased. Where is it proper to report the income? Would this be income to the estate or to the deceased individual. In negotiating the debt after the date of death the income seems to belong to the estate and not the individual income but the debt was created by the individual. I do know that if an individual who recieves 1099c can prove insolvency at the time of the debt cancellation then this income does not have to be included as income on their tax return to the extent that they were insolvent. My question here is twofold:
1. Is this insolvency treatment available to estate tax returns?
2. If so then how do you figure the assets? The house passed intestate to the father outside the probate estate and was not part of the estate. The pension and 401k accounts passed directly to named beneficiary outside the probate estate. I know that these assets would be used normally to calculate insolvency if the deceased were still alive and recieving these 1099c forms since they would be assets to pay the tax liability if needed. The estate however does not have access to these assets and was insolvent to the extent of the canceled debt. In so many words the estate doesnt have excess funds left over to pay the tax on this if it becomes income to the estate. This being the case it would seem to me that the estate would not have to show this as income.
Is this correct? If not please advise how this matter should be handeled.
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