Estate Distributions to Beneficiary

[Jayson2]

Hello, I've read enough about Distributions to Beneficiaries (from a Decedent Estate) to make my eyes bleed.

All I want to know is whether it is OPTIONAL for the Estate to report a distribution to a beneficiary, or whether the Estate can choose to consider the entirety of said distribution as a gift/inheritance.

The estate has 80K worth of Distributable Net Income. A distribution of 100K was made to the beneficiary. It was not a required distribution. Although it may cost us a little more in taxes, it is more convenient for the Estate to pay the tax on the DNI than for the beneficiary to take it on. Thoughts? -Thanks

P.S. The following thread suggests that the Estate can choose to consider the distribution a gift. Thoughts?

Solved: Form 1041 for simple estate says taxes are due. Can the estate pay the tax if the income has...

[Anonymous_]

As stated in the post to which you linked, distributions carry out DNI to the beneficiaries and, in turn, the beneficiaries report the income, credits, deductions, et al, on their individual income tax returns.

However, also as mentioned, it is difficult to figure why the IRS would make a fuss if the estate (or trust) made the decision to pay the taxes on the net income at the highly compressed estate/trust tax rates and then make distributions. 

Typically, estates do not have the discretion; they are generally required to distribute income currently.

[Jayson2]

Thank you for taking the time to respond to my query.

Rhetorically speaking, I wonder if it would raise any flags if we decide to close the estate in 2021 but don't list any distributions on the final return (Tax Year 2021)? Guess we'll have to wait and see.

-Kindest regards