Amend tax returns (nj and federal)

[avoitiuc]

Person A deeded a 4 family house in 2003 to son B and daughter C; a (poorly structured) codicil to deed states that A retains the right to live on property and handle related financial matters until death. Upon the death of the donor in 2007, it was found out that for the subsequent tax years (04, 05, and 06) A continued to treat the property as if owning it, filing Federal Schedule E and applying gains/losses to her income. (It may be that the tax return preparing Accountant was not made aware of the status quo - clear example of presumable poor advice from the Attorney that drew up Deed). It also appears that most of the tax advantages were wasted against a low / barely taxed income. It appears to me that once the property changed hands, the former owner has no longer the same tax status.
Isn't the legal/fiduciary duty of the estate executors (B and C) to take steps to correct the A mishandling of tax matters and amend A\'s, B\'s and C\'s tax returns for the three years in question? (And perhaps reap a minor tax windfall, as the case may be...)
(Footnote - B and C were advised re estate matter and to some extent the property matters by the same Attorney that drew up the Deed in 2003; in the meantime they no longer consult with same)

[judg4]

see your other post...

Fiduciary duty to correct tax return

[judg4]

see also the H & R Block web site for 20 dollars: HR Block Tax Advisor link...

H&R Block Ask a Tax Advisor | Do your Income Taxes with Help from an H&R Block Tax Professional

Sounds like a poorly drawn up conveyance of a future estate. He retained the present interest in the property from your description of the documents and as such the rents and expenses would be his as he held the present possessory interest in the property until his death. Issues to consider are whether he needed to or did prepare a gift tax return related to the transfer of the future interest and the value of the retained interest for esatte tax.

I think these persons should search for a good tax attorney. They need to clear things out, eliminate all the confusions. I also think they need filing tax returns help, things do look complicated as they are so this seems to be the only reliable solution.