Hello,
My mother passed on August 31, 2021. I applied for an Estate EIN in 2022 and I am creating the first and final return for the Estate for the tax year 2022. My mother's only remaining assets were an investment account and taxable life annuity. Both accounts were liquidated in 2022 and I distributed the proceeds evenly between me and my 2 siblings in 2022.
I received a 1099-R for the life insurance proceeds correctly made out to her Estate.
I received a Consolidated 1099-DIV and 1099-B from the investment account. However, that was made out to her name and not the estate.
The 1099-B incorrectly reported the basis as my mother's basis in the investments. However, my understanding is the estate is entitled to a stepped-up basis based on the value as of date of her death. Therefore, I calculated the valued from her statements as 8/31/2021 to the date that the securities were sold (3/14/2022) using the proceeds column from the 1099-B. Due to the market decline, this resulted in a loss which I have entered accordingly in the 1099-B section of Turbo Tax.
Question 1 - Did I do this calculation correctly as described?
The amount of the investment loss plus the deductions (for attorney fees paid by the estate) was greater than the sum of the life annuity proceeds so the taxable income calculated by Turbotax is a negative, thus no tax due. This seems to be correct.
My main questions are to confirm that the Beneficiary K-1's are correct.
The K-1's show flow through Ordinary Dividends (2a) and Qualified Dividends (2b) from the 1099-DIV.
Question 2 - is this correct as taxable income to the Beneficiary instead of the Estate? They are listed in Box 2a of the Estate 1041 and 2b as "1) Beneficiaries. " and not in 2b 2 "Estate or Trust". I am not clear if this is correct.
K-1 Box 5 Shows a positive amount. The same amount is shown as negative amount in Box 14 with code H. I do not believe this will result in taxable income to the beneficiary.
K-1 Box 11 shows the allocated capital loss under Final Year Deduction.
K-1 Boxes 12 A has a small amount related to AMT. Boxes 14 A and E appear to be allocations from the 1099-DIV.
Question 3 - Do the K-1's appear to be correct based on what I have described?
Thanks in advance for guidance.
