Stock sale in an estate

Forum|Forum|1 year ago
February 22, 2025
2 replies
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My mother owned stock in the company she worked for. When she died, her estate sold it back to the company at its stepped up basis, so no gain on the transaction. It was the only asset in her estate. The funds from the stock sale were distriubuted out from the estate bank accoun to the heirs.

We are trying to prepare this final 1041. It should be simple? How do I enter this transaction? Under Schedule D as a short term stock sale with no gain? Will the heirs receive a K-1 even though there is no income in the estate?

Detailed guidance is most appreciated! Thank you.

Not A Product Question

M-MTax

Beneficiaries would not receive a K-1 unless there was income, gain, final deductions, or credits to report. Here you have none of that so K-1s would not be needed.

M-MTax

If you're not using some sort of 1041 preparation software, nothing is truly simple.

In this instance, you would enter the transaction on Form 8949 and, from there, Schedule D (1041). The resulting figure would then be entered on Line 4 of Form 1041, which should be zero according to your calculations.

Obviously, there will be no gain and, hence, no tax due but you most likely need to report the sale to the IRS so that they know the basis for the stock.