Legal Question in Wills and Trusts in New Jersey
tax filings of individuals who had a house willed to them
on 01-15-01, grandfather passed away, myself and 2 other grandchildren are the executors each 1/3 of the estate. only asset in estate is the house, fair market value at date of death is 150k. we sold the house on 6-15-01 for 155k. the nane on the house settlement sheet is the estate of my grandfather not any of us grandchildren who were named in the will as receivers. do we, the 3 grandchildren have to report this on our 1040 return, or must this be on form 1041 for the estate. do we have to file form 1041 sice the assets of the estate are under 200k?
thank you
1 Answer from Attorneys
Re: tax filings of individuals who had a house willed to them
You have to distinguish between your roles as executors and as heirs.
As executors, you are responsbile for paying debts, filing income and inheritance tax returns for your grandfather, and for his estate.
Since the house was part of the estate and was sold as such, the proceeds are part of the estate and should be used to pay estate espenses, your grandfather's debts, taxes, and only then may you distribute what is left to yourselves as heirs or beneficiaries of his will.
The proceeds of the sale are not income, because they just represent the substitution of money for another asset, the house.
You should consult an accountant familiar with estate and inheritance tax issues or an attorney to assist you in this.
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