Inherited REMICs

[Kea]

Client asked me to file final return for his mother who passed away in Nov. 2011.

Mom had several REMICs. Associated with them are 1099 Int, OID & B.

1099B shows monthly sales. Each has a quantity of 40,000. ( I don't think she would have sold 40,000 shares every month.) It shows proceeds, but no basis info. Proceeds for January - October are a few hundred $ each month. But the November sale shows several thousand $. I believe the basis (Jan - Oct) should be the same as the proceeds based on what I have seen reported before (son also owns REMICs & that's what's shown on his 1099B from a different broker). If the basis isn't the same as the proceeds, how would it be calculated? For November, I should use a stepped-up basis. But these just don't seem like regular sales, because even though they all have the same # of shares, the last month's proceeds are significantly higher than the other months. Perhaps November is a "real sale" where the brokerage is moving the assets to the benes. Client did say that in some cases the broker found it easier to sell shares from Mom's account and then buy them in the son's accounts.

Mom's brokerage account was set to POD to her 2 sons 50-50. But, of course, the assets did not transfer on DOD.

I am familiar with how to move the interest and dividends as IRD (income in receipt of decedent) to beneficiaries. I have not had to move capital gains and / or REMICs.

I did do some research on REMICs and saw discussions about how to treat the OIDs (yuck!), but saw nothing about monthly (or any periodic) sales. (Also didn't see if there's anything special for OIDs in terms of IRD.)

Any assistance on how to treat REMICs would be appreciated. I know they are mortgage securities but not sure exactly their differences or similarities to stocks and bonds. (I have lots of experience with stock, bond and mutual fund transactions, but not REMICs).

(This is my 2nd decedent return this year and I know there is one more still to come in. I've done 3 or 4 in the last 13 years and now 3 in one year.)

Thanks!

[jainen]

>>For November, I should use a stepped-up basis.<<

I would guess the son was stealing from his mother, but in any case the decedent can NOT get a stepped-up basis on the final return,

[Kea]

On closer look, it turned out everything sold after DOD was purchased after DOD. So no step-up anyway. Not sure how that happened. I even mentioned it to the broker when asking other questions and he responded "we don't do that; that shouldn't have happened." Well it did - unless someone entered something on the 1099B wrong. (But that never happens!)