Q. My mother died suddenly so her sole-trader business ceased at that point. I am the executor of her will and I appointed a solicitor to collect the debts due on her outstanding sales invoices after her death. The business was taxed on a cash basis. How should I account for the sales income and expenses received after the business ceased?
A: As your late mother used the cash basis, all the business expenditures paid out and sales income received before her death should be reported on her personal tax return drawn up to the date of death.
The cash received for the business after the date of death should be reported by you as executor of the estate on a tax return for the estate. The costs of collecting those sales debts are deductible against that sales income.
The information provided in this blog is for general informational purposes only and should not be considered professional advice. As far as we are aware, the content is accurate at time of publication. Torgersens assumes no responsibility for errors or omissions in the content or for any actions taken based on the information provided.
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