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catheco
Level 2

Estate pays tax on IRA no K-1 required?

Estate has only IRA of about $30K which we want  to pay the taxes on at the estate level and not via a K-1 distribution it to beneficiaries. (no will and it's in probate now) 

In this case does the 1041 reflect no income distribution deduction just the 

$30 Income - fees  -$2 = $28K taxable income and pays the tax calculated.

Please confirm or advise if when the  cash amount of $28k is distributed to the beneficiaries NO k-1 is issued because it's been paid at the estate level.

Thanks 

 

5 Replies
tagteam
Level 15

Estate pays tax on IRA no K-1 required?


@catheco wrote:

Please confirm or advise if when the  cash amount of $28k is distributed to the beneficiaries NO k-1 is issued because it's been paid at the estate level.


That would be correct; the distribution would consist entirely of corpus (principal) and no tax liability would accrue to the beneficiaries.

 

K-1s would not need to be issued unless items of income, gain, deduction, or credit were being distributed (or deemed to be distributed) to the beneficiaries.

Carl
Level 15

Estate pays tax on IRA no K-1 required?

@tagteam isn't a 401(k) usually passed outside of any will, per the beneficiary identified by the account owner when the account was originally set up and created? Wouldn't the owner have to actually leave it to their estate, in order for it to be included in the estate?

 

 

tagteam
Level 15

Estate pays tax on IRA no K-1 required?

There has to be at least one named beneficiary who did not predecease the account owner.

catheco
Level 2

Estate pays tax on IRA no K-1 required?

This was a bank IRA and no bene and no will.. and the PR want to pay at the estate level 

tagteam
Level 15

Estate pays tax on IRA no K-1 required?


@catheco wrote:

This was a bank IRA and no bene and no will.. and the PR want to pay at the estate level 


I figured this, or something similar, was the scenario.

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