Legal Question in Tax Law in Massachusetts
We are handling my brother's estate. We are just about ready to settle the estate. It is supposed to be split 3 ways with my sister, brother and myself. (i was the beneficiary of $200,000 from his IRA.) My intentions were to let my brother and sister split the estate (money from selling his house and combined bank accounts etc.) (therefore, they would end up with close to the same amount of money) at the paper passing the attorney had the three of us sign 1099 forms....(house was sold at a loss) Would there be tax ramifications for me if I infact gave up my share and let my brother and sister have it? What will happen to the 1099 form at tax time? Should I just take my 3rd?
2 Answers from Attorneys
Your specific situation includes major tax (income tax, inheritance tax, estate tax, and gift tax, etc.), inheritance, gift, and tax reporting, and other legal questions. Irs form 1099's are reported to the IRS whose systems later compare and match them up when the taxpayer(s) tax returns are filed.
Since your personal tax situation and that of each of your siblings, and that of the decedant's estate are each unique and somewhat "intertwined and "interdependent", you would be wise to seek professional legal and tax advice from your personal professional advisors.
Good Luck!
If you decline the inheritance, then there should not be either 1099 and income tax implications to you. You need to speak with the attorney handling the estate to make sure the declination is handled properly.
You should also take into account that the money in the IRA of your brother is subject to income tax when disbursed. Depending upon your age and income, you have several options, including rolling over the IRA and deferring taking the proceeds until you reach 70 1/2 years of age.
Good Luck.
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