I am in the process of distributing the beneficiaries their $ from my late Aunt's Estate. I am working on the 1041's I see where on Turbo Tax you can indicate that none of any capital gain is allocated to the beneficiaries but do not see this option for the dividends. How do I get it so beneficiaries are NOT responsible for any tax??
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Once again the form 1041 is to report and pay taxes on income earned by the estate ... it has nothing to do with the distribution of the corpus ... the IRS doesn't care.
Read that form 1041 & instructions carefully or seek professional help to complete the return correctly [inappropriate communication]
https://www.irs.gov/site-index-search?search=1041&field_pup_historical_1=1&field_pup_historical=1
https://ttlc.intuit.com/questions/1901403-do-i-have-to-file-a-trust-tax-return
you'll need to read the legal documents associated with the trust/estate. they may specify the income must be distributed to beneficiaries. Whether that includes capital gains would also be specified in the documents. Your state probably has an income and principal act that defines how expenses are to be allocated. this can affect the computation of accounting income and distributable net income which will affect the income beneficiaries are to report.
for example. for income tax purposes the income/loss of a partnership would be reported. however, for accounting income purposes under many state laws, only the cash received is included.
@Mike L Thanks for using AnswerXchange and thank you to all the volunteers that have answered here.
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