Question

Question - which is the correct answer Decedent at death owned 400 shares of ABC having a reported value on the NY Stock Exchange of $800 and for which he paid $300.A federal estate tax return was not required for the decedent’s estate. The personal representative sells the ABC for $500 four months after the decedent’s death. a.the estate recognizes neither gain or loss on the sale. b.the estate recognizes a short term capital loss of $300. c.the estate recognizes a long term capital loss of $300. d.the estate recognizes a long term capital loss of $150.

Answer 1

An estate is a taxable entity separate from the decedent and comes into being with the death of the individual. It exists until the final distribution of its assets to the heirs and other beneficiaries. The income earned by the assets during this period must be reported by the estate under different conditions. Thepersonal representative must file a separate schedule of Beneficiary's Share of Income, Deductions, Credits, etc.

The personal representative has a fiduciary responsibility to the ultimate recipients of the income and the property of the estate.

income of an estate consists of all items of income received or accrued during the tax year. It includes dividends, interest, rents, royalties, gain from the sale of property, and income from business, partnerships, trusts, and any other sources. The personal representative of the estate may receive income the decedent would have reported had death not occurred. The he administration of the estate, the personal representative may find it necessary or desirable to sell all or part of the estate's assets to pay debts and expenses of administration, or to make proper distributions of the assets to the beneficiaries. The  gain or loss is usually the difference between the fair market value of the property when distributed and the estate's basis in the property. An estate (or other recipient) that acquires property from a decedent and sells or otherwise disposes of it is considered to have held that property for more than 1 year, no matter how long the estate and the decedent actually held the property.

So accordingly statement no. (b) is correct to the best of my knowledge.