Kea

Thanks for the reminder. However, I didn't remember the 1985 stipulation at all. Even though I'm in TX, I don't see this situation very often.

I'm going off the top of my head, here. But if it's a community property state, wouldn't the basis of the whole property step-up? I know that may depend on the original designation of how the property is held.

Every year I have clients that ask me about deducting their pets. I always tell them they have to get an SSN first. And if they figure out how to do that I can hook them up with several clients that would be interested in that service. I know this bill would make many of my clients HAPPY.

I've always believed that it's abnormal to be normal, and normal to be abnormal. After all, how many "normal" people do you know?

One Form 56 for decedent and one for estate. Yep. Done and Done.

Sometimes faxes and e-mails can get combined. For example, my incoming faxes go directly to my e-mail. I still have a fax phone # and people send faxes the way they normally would. But they don't come to a machine in my office. They get transferred to a .pdf file and show up in my in-box. There are similar processes for out-going faxes, but I haven't used those.

OMG!!!!!! Thanks Taxbilly. When I responded to michaelmars' statement about tax rates, I was referring to Texas not having an individual income tax. But, I must admit, I never knew TX had an estate tax, either. Yes, I'm familiar with the comptroller's website and the existence of franchise tax and sales tax. I'd never heard of the TX inheritance tax and didn't even think to investigate. Thanks for helping me avert a disaster. After I get the Federal & TX extensions, I'll also look for local help, ... or just bail out. And I thought I was getting the hang of this. Thanks again. Edit: This page ( http://window.state.tx.us/taxinfo/inherit/index.html ) says: "Please note that no state inheritance return is required on estates with a date of death on or after January 1, 2005." Now, for more reading! Edit 2: This page ( http://www.window.state.tx.us/taxinfo/taxpubs/tx96_127.html ) says: "A Texas Inheritance Tax Return must be filed for the estate of every decedent whose date of death was on or after September 1, 1983, and up to December 31, 2004, if:"... federal estate return required & resident of TX at DOD or owned prop in TX. So, I think I'm off the hook on that one. (I hope!) What else could I have missed?

1 -- No Problem. However funds are only available in an account that she got TOD -- so it is already in her name and not the name of the estate. Hopefully that's OK. IRS shouldn't care as long as they get the $$. 2 -- Not sure how bank treats them, but the INTENT was for bill paying and to make it easy for her to have access after death. No gift tax returns were ever filed. She never used accounts for herself. Does this mean I report in Schedules B & C even if they are titled "Joint Tenants"? 3 -- I will advise her to get actual appraisals (will also apply to some other land that will not be sold). I was using the realtor's estimates (DOD and when put on market) to get an idea if estate would be taxable, but was going to use actual selling price if it sells soon. 4 -- Her tax bracket is under 45%. I'm not sure what it will be this year with all the changes, but TX has no state tax. She was in 15% last year. Thanks so much for your help.

She will pay whatever estimate is on the extension. So, if there is an amount, then obviously an "unnecessary" 706 becomes necessary to get refund -- if it turns out that estate is under. I guess to be safe, it's best to overestimate the amount of the estate and pay more now. Then when filing the "real" one, get the refund. There is an IRS walk-in office here. Would it be better for her to drop off there and get receipt? Or do the walk-in offices still accept returns?

It's due 10/5 and is going on extension. Client's parent added her to several bank accounts (that included CDs) so that client could pay medical bills, etc. if parent unable. Client never funded these accounts, but did pay parent's bills before and after death. I'm not sure what type of joint accounts these were (joint tenant or tenant in common). If they are joint tenant and client did not contribute to accounts, is it still correct to report on Schedule E and only bring 1/2 the amount into the gross estate? Parent had a pension that stopped at death, but did provide taxable "death benefit" to beneficiary (client). This has not yet been claimed due to issue I asked before regarding converting it to "Inherited Roth." Is this considered life insurance, or does it go somewhere else or not at all? Annuity - one set of instructions I read said to value at original contract price. This annuity was in a traditional IRA, and was purchased with check transferred from previous employer. (She did get find out that amount.) Another set of instructions said to use the current cost to buy that level of annuity. RMDs have started. Perhaps value on DOD (or alt valuation), or something completely different? But if this money has never been taxed and will be taxed for client as collected, is it still included in estate tax? Sounds like double taxation. Traditional IRA in CD - same basic question. I'm not sure how much if any to include in Schedule H (or somewhere else). For both the annuity and CD IRA, RMD was already started. Client is very close to the $3.5M cutoff. There are still a few small assets to value and depending on answers to above, amount could be above or below cutoff. For example, house still has not sold. Realtor provided estimated value at DOD, but final selling price may be significantly lower. Should client, who is the sole beneficiary of the estate, pay herself a fee for being the executrix? (Sounds like a game to me, but she asked me.) If so, what is a reasonable fee? No, I won't tell her whatever is enough to bring total under the cutoff. This estate has been complex is she is spending quite a bit of time on it. Some of the figures will not be final until after 10/5. Is it better to file an extension and not need it, or to not file it and then need it. I assume the first, but then does that mean you have to file an unnecessary 706 to show you are under the amount after all? Sorry for so many questions. I actually feel like I understand MOST of the 706. I feel comfortable enough to do the extension. I still may want someone else to review the final, or I may bail and let someone else do all of it. Thanks so much.

I haven't heard of this particular problem before in the US, but that doesn't mean it hasn't happened. There was a case recently of a lady waiting in an ER for many hours and even though medical personnel walked by her and saw her getting worse or even lying on the floor, no one came to help her. She died right there in the waiting room and it was all caught on security cameras. I'm not defending or promoting any type of system (at this time). I'm pointing out that mistakes can happen in public or private systems. The lawsuit option should always be available regardless of what type of system is in place. I get real worried every time I see a politician talk about setting up arbitration boards or other methods to prevent or restrict lawsuits. I agree that there have been frivolous lawsuits, but in order to tackle that problem too may people suggest severe limits or elimination of lawsuits. When someone makes a severe mistake (doctor, hospital, oil company, local store, whoever), the victim has a right to compensation that is significant enough to teach the company or individual not to make that mistake again.

We've had plenty of similar scary stories right here in the US. Private US hospitals and doctors make mistakes, too.

I'm glad she's OK. I hope she has good insurance.

Thanks Eli, It's a very important message. I'll take this time to throw in the reminder to not drive drunk either. My would-be brother-in-law was killed by a drunk driver almost 25 years ago. We all need to remember how important it is to be awake and alert when we drive.

New client is a self-employed "land man." She does title searches for oil related businesses. The standard practice is to bring in contract workers for no specified time. These assignments can last a few days, weeks, months or sometimes, years - it depends on the oil economy and how that business is doing. I gathered from her that the shorter jobs are more typical. This last assignment lasted 10 months and was located in another town from her home and so she racked up quite a few miles on her car. The town was close enough that she did go home each night for a few months. Then she rented an RV space to save the travel time. The job lasted less than a year, but I'm having trouble determining if it was "expected to last more than a year." There was no expectation and she knew the job could end at any time. My interpretation: "Was the job expected to last more than a year?" I would answer that "no." Am I interpreting this correctly? Or, does the lack of time frame make it non-temporary? Thanks.

As long as we are reading articles - how about one from one of Newsweek's Senior Editors who writes science articles? http://www.newsweek.com/id/212131

Thanks for everyone's suggestions. I'll discuss these options with my client. I would like to eliminate the SE tax. It may seem like a small amount to some. But, my client is retired and living on a small pension and Social Security, so this amount would be significant to her. I'm sure coming up with the extra income tax will also be challenging. It's not just the tax on the 1099-Misc, but also the tax on the additional SS that is now taxable thanks to the higher income. Thanks again.

OK, I screwed up. Client received a CP2000 for 2007. I didn't find out about it until last month at which point she had misplaced some of the pages. IRS resent the letter and I got copy today. Turns out original was sent out some time ago because it requested response by 4/8/09. Anyway, when working on 2007 return, (70 year-old retired) client gave me a 1099 Misc with $3111 in box 7. I set it aside to ask her what it was for. Turns out it was for babysitting her twin great-granddaughters while her daughter was trying to get custody from the kids mom. I don't remember all the details, but it was going through Social Services or some similar agency and so my client was being paid by Greater Austin Area Worksource. Somewhere in this process I managed to completely leave it off the return. IRS letter is adding SE tax since income is in Box 7. This was not something she was doing as a regular job, so I would have included it on line 21 if I hadn't screwed up. Am I correct that this should not have SE tax? Can I still fix that if the original response date has passed? The only other deadline I see on the form is that the last day to petition the tax court is 8/31/09. Or, at this late date, is the only option for my client to pay the total IRS is requesting? Obviously, I'll pay any interest & penalties. Thanks

Catherine, Are you sure they want to feel USED? Maybe they want to feel USEFUL? I, too, am grateful for all the folks here with all their experience and knowledge. Especially since everyone is so willing to share with everyone else!

Gosh. I sure hope not.

Thanks so much. I didn't even think to check for an FAQ section on the IRS website. I guess I should have. I'll blame the late hour, and the ease of asking my friends here.

Client bought new home in the US last month. When I asked if she had owned a home before, she said "not in the US." Before I follow up with dates, etc., I wasn't sure about this qualifier. I know the new home has to be in the US and that they can't have owed a primary home in the last 3 years. Is that "any" home or is that also limited to the US? If I'm reading the instructions correctly, they would qualify even if they still owed the house, but it stopped being their primary residence more than 3 years ago? Thanks.

Good luck and congratulations.

Thanks. I was hoping for free, but I guess I can't be too picky.

Thanks for all your help. I am a bit nervous about my 1st 706 and don't plan to do anything I'm uncomfortable with. I'm glad to hear that the 2008 software will update with the 2009 706. The realtor's assessment of fair market value for the land did come in significantly less than the county appraisal -- due to the poor condition of the land, and the county over-valuing property to get more revenue. I don't have final figures for the alternate date yet, but there is a small possibility that it might come in under the $3.5 million mark. The land won't be sold, but a house will. Does anyone have a source for historic bond prices? I haven't found anything. Thanks again.