Turbotax Business: Estates form 1041 and two form K1 generation bugs

[javaengineer]

In 2019, I used TurboTax Business 2018 to begin the process of winding down my deceased parent's estate.  In 2020, I purchased TurboTax Business 2019 to complete the process.  The TT 2019 installation transferred information from the TT 2018 filing, and correctly recognized it as a decedent's Estate.  But it failed to generate form K-1 for the beneficiaries.  There were no K-1s in the final report for filing, and when I clicked the button to generate K-1s, it declined to do so and told me that I needed to provide the names of shareholders (or something like that).  It clearly seems to be confused because form 1041 is used for both partnerships and Estates, the former has shareholders, the latter has beneficiaries.  I had provided the names (and other details) of the beneficiaries.

This is potentially a big deal, because there are a lot of people like myself who rely on TT to help us sort out unfamiliar tax situations.  An executor is responsible to provide K-1s to beneficiaries, and anyone who fails to do that could be fined.  TT doesn't even give an error message, so anyone acting as executor won't necessarily know that the program is not doing something that its supposed to do.

I ran the process a second time, declining to transfer from the 2018 return and opting to manually enter that information on my own.  Then it generated the K-1s, but it left out important information, which apparently is the subject of yet another TT K-1 bug, described here: https://ttlc.intuit.com/community/business-taxes/discussion/estate-1041-k-1-box-11c/01/641846#M25333

Hey Intuit: you need to fix this, or people will start talking about how they missed out on a huge tax break because their executor used TurboTax to generate their K1 forms.

[tagteam]

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@javaengineer wrote:

It clearly seems to be confused because form 1041 is used for both partnerships and Estates, the former has shareholders, the latter has beneficiaries.

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I will report this (again) but, as an aside, Form 1041 is used by trusts and estates, not partnerships (which generally report on Form 1065).

However, there appears to be an issue with some transferred 1065 returns dropping partners from 2018 to 2019 so it begs the question as to whether the programming glitch (or other error) is related to transferred 1041s as well.

[javaengineer]

Thank you for indicating that someone will at least be told about this problem.

[LindaB1993]

Please update TurboTax Business to insure accurate reporting of the Form 1041.  

In the case of a death, the executor must file a Tax Return for Estates and Trusts (Form 1041) for a domestic estate that has:

• Gross income of $600 or more for the tax year, or
• A beneficiary who is a non-resident alien

[javaengineer]

Thanks for the pointer, but I don't think it applies in this case.

In my case, the estate had no tax due. However, there were other reasons to file a 1041.

• The Decedent had three years of tax refunds due from both IRS and state.  I filed for those last year and my understanding is that the state  refunds need to be treated as taxable income on the 1041.
• As Executor, I have a strong interest in filing forms 4810 and 5495 to limit the period of time when I might be held personally liable for any errors in the estate's (or the Decdent's) tax filings.  My understanding is that I can't file those until after I've filed the "final" 1041, with the "final" box checked.
• The Estate had an operating loss (due to sale of a property at below market value, and attorney fees).   Each of the beneficiaries are entitled to a share of that loss if it's still on the books at the time of the estate's final tax return.

Bottom line: I need TT to generate the 1041 and the K-1s, even though there was less than 600 of gross income in the tax year.

[LindaB1993]

I see that your Form 1041 is more complex and requires attention to detailed information.    It is evident that you have extensively researched the requirements for filing an accurate and complete Form 1041.  

I am confident that TurboTax can accommodate the additional schedules that you need.  

We are available to resolve any programmatic questions that you may still have.

[javaengineer]

Thanks for recognizing that I have a somewhat complex situation and that I have done my research. Sadly, I think there are probably millions of people in this country in a situation that is similar to mine. An aging parent develops dementia and they stop filing their tax returns. The children don't realize this until the tax returns are several years overdue. And then one day, the parent passes away and the children are left to muddle through all of the intricacies of dealing with an estate. Most people will only have to do this either zero or one or two times in their lives. Even without overdue or incorrect tax returns from previous years, there is still a ton of stuff to learn if you find yourself as the Executor or Personal Representative of a parent's estate. I had hoped that TurboTax would help to see me through this task, and in some ways it did, but in other ways it failed. TT was great when I needed to file returns for previous tax years. TT wasn't so great when it came to explaining that I should be filing additional forms with those returns. They all got kicked back by the IRS, with requests that I file a form 1310, even though I had previously filed a form 56 with the IRS that led me to think that I didn't need to provide a form 1310 with all three returns for three prior tax years. And TT hasn't been so great when it comes to filing the estate's final 1041 and K-1 forms (which is where this forum post started). If you'd like to contact me for more details about my experience, I assume you have access to Intuit's record of my e-mail address: feel free to contact me there.

[tagteam]

@javaengineer You can submit your feedback in-product or in writing. However, only certain Intuit employees (such as Administrators) have access to your email address.