1041 For Estate

Forum|Forum|4 years ago
January 14, 2022
2 replies
25 views

I am trying to finish up the 1041 for my mom's estate. I think I am doing it correctly but want to double check what TurboTax and I came up with. Mostly that I didn't mess up somewhere..

The only asset was her home. It had a step-up value of $287,800.00 and sold for $316,500.00. After subtracting closing costs (not including $441.43 in property tax paid as part of the sale) there was a gain of $5,529.00 which was entered on the 1041. After subtracting the property taxes paid and the probate attorney fees, there was an adjusted total income of $896.00. After the $600.00 exemption there was taxable income of $296.00 and a tax of $30. I do have some questions. First, does the money in the estate account(the net proceeds from the home sale, and from a state tax refund) go anywhere on the 1041? Is the amount of the money, from the bank account, each beneficiary gets put on the K-1? Next, does the entire $5,529.00 that was capital gain get divided among the heirs and entered on the K-1's even though it was reduced by the subtraction of the property taxes and the probate lawyer fees? Or is it the $30 tax showing on Line 28 that gets divided.

Unfortunately, TurboTax Business doesn't support the state tax forms for estates in Oregon. So doing that is going to be an adventure.

TurboTax Business Windows

Anonymous_

Level 15

The principal (corpus) in the estate account is not entered anywhere on the 1041 nor the K-1s.

Only income, gain, deductions, and credits are reported on the K-1s, not distributions of corpus.

cfergAuthor

Level 4

Wow! That is great. I have always been under the impression that K-1's were required for any distribution from the estate, and especially for the proceeds of the sale of the decedent's residence. That should make all of my siblings happy (and me too.) Thank you very much.

Anonymous_

Level 15

Typically, an estate or trust will pass through any income or gain to the beneficiary(ies) due to the compressed tax rates for both entities, in which case K-1s will be issued.

However, if the entity pays any tax due, there is usually no need to issue K-1s.

Anonymous_

Level 15

@cferg wrote:
After the $600.00 exemption there was taxable income of $296.00 and a tax of $30.

If you are distributing income (gain) to the beneficiaries, then there is no exemption for the estate. The exemption is only available if the estate is paying any tax due.

Again, if the estate is paying any and all tax due (and not distributing income/gain to the beneficiaries), then it is likely you do not need to issue K-1s.

cfergAuthor

Level 4

Thank you. I was under the impression that the estate was not allowed to pay the Capital Gains tax and that any distributions from the estate account had to be reported on a K-1, especially when it is the proceeds of the sale of property/real estate. That will make life much easier and my siblings much happier.