Ronald M. Martin died on March 4, 2020. Ronald was married to Sally B. Martin. Title to the various estate assets is indicated below. Ronald’s separate property assets were subject to probate proceedings and his Will named Sally B. Martin as his personal representative. Sally will receive Ronald’s entire estate. Assume the life insurance is held in an irrevocable life insurance trust (ILIT), and therefore, not included in the taxable estate. Ronald doesn’t have a taxable estate, but his personal representative (Sally) would like to elect portability and transfer his applicable exclusion amount to Sally. Sally has not remarried since Ronald’s death.

A list of Ronald’s assets valued on the date of death is shown below.

Decedent’s Assets
Asset	Title to Asset*	Estimated FMV	706 Amount	Probate Amount
House	JT	$ 4,000,000	$ 2,000,000	$ 0
Cabin	JT	950,000	475,000	0
Stock	S	3,000,000	3,000,000	3,000,000
Life Insurance	ILIT	1,500,000	0	0
Cash	S	1,000	1,000	1,000
Bank Accounts & CDs	S	1,250,000	1,250,000	1,250,000
Vehicles & Misc. Property	S	157,400	157,400	157,400
IRA	S/B	1,345,000	1,345,000	0
Accrued Dividends	S	1,400	1,400	0
Accrued Interest	S	700	700	0
Total	$ 12,205,500	$ 8,230,500	$ 4,410,500
*Notes – JT = Joint tenancy with right of survivorship S = Separate Property S/B = Separate with designated beneficiary ILIT= Irrevocable Life Insurance Trust

Income earned on probate assets after Ronald’s death as well as Income with Respect to a Decedent (IRD) are listed as follows:

Probate Estate Income
Source of Income	Amount
Interest Income from Savings & CD Acct.	$ 6,800
Interest from Estate Bank Account	200
Dividend Income	1,400
Capital Gain Distributions	800
Total	$ 9,200

No distributions were made from Ronald’s Estate during the taxable year (2020).

Estate Expenses
Expense Item	Amount
Funeral Expenses	$ 7,800
Administration Expenses1	6,100
Credit Card Balances & other debt	9,500
Total	$ 23,400
1Administration expenses can be deducted on Form 1041 or 706 but not both. They consisted of the following items: Attorney Fees $ 4,800 Tax Preparation Fees 1,000 Court Costs 300 Total $ 6,100

Ronald & Sally Martins’ Income Summary for 2020
Income	Total	Ronald’s Final 1040 or Joint Return	Estate’s 1041	Sally’s 1040 or Joint Return
Dividends	$ 2,600	$ 1,200	$ 1,400	$ 0
Capital Gain Distributions	800	0	800	0
Savings Account & CD Interest	12,800	6,000	6,800	0
IRA Distributions	10,000	0	0	10,000
Pension	37,000	37,000	0	0
Estate Bank Account Interest	200	0	200	0
Totals	$ 63,400	$ 44,200	$ 9,200	$ 10,000

Property	FMV	Tax Basis
La Verne Residence	$ 4,000,000	$ 2,500,000
Big Bear Lake Cabin	950,000	700,000

Required Items ☹ -

1. What options does Sally have regarding the filing of IRS Form 1040 for 2020? Can she file a joint return with Ronald for 2020 or does Ronald’s Estate need to file IRS Form 1040? Based upon the facts provided, prepare a simple Excel worksheet comparing Sally’s two filing options, i.e. file Joint Return with Ronald for 2020 vs. filing separate 1040s for both Ronald and Sally.

Probate Estate is required to fill IRS Form 1041, prepare IRS Form 1041 for the probate estate. Go to IRS website and fill-in Form 1041 and related forms and print.