TREATMENT OF ESTATE PROPERTIES AFTER DEATH OF ASSESSEE

[CABIJENDERKUMAR BANSAL]

Dear All

Assessee was having business of sale purchase of land and building, he was expired in 2014.After that an Estate was formed by the surviving members of the deceased as an AOP. Estate was formed because settlement was not done between family members.

From that year onwards, estate is doing sale purchase of land and building and simultaneously transferring some stock to all the members in equal ratio at cost, for which we are doing journal entry as follows:

Capital A/c Dr.

To transfer (distribution of asset) credited in trading account to adjust stock

Now first query is : Is this treatment correct or any other treatment should be made ?

second query: Whether this transfer value will be considered for calculation of turnover for Tax audit purpose?

Third query: In the hands of transferee, it will be stock in trade or capital asset considering that they are not into business of sale purchase of immovable properties.?

Fourth query: can the estate continue its business activities(sale as well as purchase with third parties) or it should only distribute existing stock to its members ?

Thanks

Deepak kakkar

AI Summary

Family Forms Association to Manage Real Estate Estate; Queries on Tax, Accounting, and Asset Classification Raised An individual involved in the business of buying and selling land and buildings passed away in 2014. The surviving family members formed an Association of Persons (AOP) to manage the estate, as the settlement was not finalized. The estate continues trading in real estate and distributes some stock equally among members at cost. The queries raised include whether the accounting treatment is correct, if the transfer value counts towards turnover for tax audit purposes, how the transferred assets should be classified for the transferees, and whether the estate can continue business activities. Respondents suggest consulting a Chartered Accountant for detailed advice.