Stock Distribution from Estate

[Anonymous]

I am preparing the 1041 for my grandmother's estate using TurboTax Business.  The only asset in the estate is stock.  The remainder of the estate was distributed through a trust, but this asset was mistakenly not placed in the trust.  During 2022, the only distributions to heirs were shares of stock.  The shares were not sold before or after distribution.  Do I report this when TurboTax asks "Did the Estate Make Any Distributions to Beneficiaries in 2022?"  The information says "Distributions can also be made from the original assets or principal left by the decedent or maker of the trust."  However, I know that these distributions aren't taxable, and they don't represent income earned in 2022.  The capital gain distributions and dividends from 2022 were reinvested in the same stock, and those shares will be distributed in 2023.  I believe the estate should pay taxes on those capital gain distribution and dividend amounts reported on the estate's 1099.   I understand all of that, but I'm not sure about the whether the stock distributions should be entered.  If I do enter them, the Income Distribution Deduction still shows zero, and the K-1s still show zero for everything.

[Anonymous_ · Accepted solution]

It makes no difference whether or not you enter distributions of corpus (principal). Technically if all there were to distribute was the stock (i.e., no dividends, interest, gains, etc.), the estate would not even be required to file a 1041.