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  1. #1
    Join Date
    Oct 2009
    Posts
    11

    Default Problem with 1041 Form and Closing the Estate

    [New Jersey]
    I've just become an administrator (and one of the 3 beneficiaries) of a small estate. It's one bank account producing no income. The small catch here is that this is a part of a larger foreign estate of a foreign resident with foreign assets and - mostly - foreign heirs. The bulk of it was probated long time ago and assets distributed. However, since our family gets along well, we decided that for simplicity's sake the US bank account would go to me and I let them collect whatever was located abroad.
    I'm pretty much ready to close the estate here. Here are the questions:

    1) I called IRS and they claim, that even though there will be no taxes due,
    I still need to file 1041 AND obtain Tax ID #s for the non-resident aliens (that's the reason and huge pain considering that all ID docs will have to be translated. notarized and legalized for US). However IRS does not care about the legal issues concerning the will and since the estate produces no income and I had no plans of wiring anything abroad then perhaps I don't need to file anything? It's way below 1 million mark anyway.
    2) the court was pretty vague about it but all they seem to require are standard Refunding Bond and Release forms, signed by beneficiaries and notarized - I'm almost done with that. Is that correct or do they have a long list of other paperwork requirements - and especially do they need to see any tax documents or accounting sheets.. etc. And do they issue a document stating the estate is closed? That wasn't clear to me.
    3) wouldn't it make everything simpler if the other heirs came up with some kind of renunciation document? Ie: "we see that we inherited something, but we're fine with so-and-so keeping the whole thing". Or is it already considered a gift?

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Problem with 1041 Form and Closing the Estate

    1. You are supposed to file the 1041 as instructed. Whether or not you'll get away with not filing one isn't really something I can tell you.

    2. For an answer to that, you'll have to ask the bank.

    3. Have you opened an estate to resolve inheritance of the assets located in your state?

  3. #3
    Join Date
    Oct 2009
    Posts
    11

    Default Re: Problem with 1041 Form and Closing the Estate

    The instructions to 1041 claim that if the estate doesn't produce income above 600, it does not have to be filled unless there are alien non-residents involved in distributing the estate. As I mentioned above, this bank account is only a part of a foreign estate and those above mentioned alien non-residents received their share long time ago, however informally that might have been taken care of. They signed bond releases so legally I think I'm OK.
    No distribution of this part was planned - it all stays with me.

    The bank had no problem with moving the money to the estate's account - non-tangible assets of a non-resident are not taxed by the NJ state.

    So far the only thing I did was getting a tax ID, opening the bank account for the estate and moving the money there. I also took care of filing the last 1040 for the deceased. He died in March (years ago but still...) and never had the chance to take care of it. Plus I'm in the process of collecting Bond Releases from the beneficiaries. The thing about IRS is that it's a fiscal issue, not a legal issue. They don't ask for a will or any court paperwork. All they care are the numbers. And the numbers, whatever I do, will not generate any taxes. Whether the entire estate (I'm still talking about the US part only) gets deposited into my bank account or gets divided into domestic and alien parts makes absolutely no difference for the IRS - I'm not trying to hide the money. But it does for me because it saves me a lot of hassle.

  4. #4
    Join Date
    Oct 2009
    Posts
    11

    Default Re: Problem with 1041 Form and Closing the Estate

    PS. My grammar above seems a bit sketchy, sorry. What I meant to write was: "The instructions to 1041 claim that if the estate doesn't produce income above 600, 1041 does not have to be filed... "

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