Q. My Father Died Suddenly So his Sole-Trader Business Ceased at that Point. I am the Executor of his Will and I Appointed a Solicitor to Collect the Debts due on his Outstanding Sales Invoices After his 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 father used the cash basis all the business expenditures paid out and sales income received before his death should be reported on his 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.