I am the executor for my father's estate and I have a few questions on the 1041.
I distributed a large portion of the estate's corpus in 2024 but I did not include any income in the distribution. The decedent's will does not require income to be distributed so I held off distributing income.
The estate had some tax exempt income, and capital gains thus creating a situation where there is no income available to be distributed to beneficiaries except tax exempt income.
For 1041 Schedule B
Line 1 (total income) is $63546
Line 2 (tax exempt income) is $3279
Line 6 (Capital gains as a negative number) is -$67987
Line 7 (distributable net income) is $0 since all taxable income is essentially capital gains
Line 9 (income required to be distributed) is $0
Line 10 is asking for other amounts paid, credited or otherwise required to be distributed.
If I enter the corpus value distributed on line 10 of 1041 Schedule B, it generates a K-1 for each beneficiary with $0 taxable income and $1093 of tax exempt income (line 14A) as well as a portion of foreign tax paid (line 14B).
My siblings are foreign non residents and do not want a K-1 and thus the complexity of filing a 1040-NR so they have requested that all taxes be paid by the estate.
My questions
1. Do I have to enter the full amount of the distribution (basically the corpus amount) on line 10 above or do I only have to report the income portion of the distribution which is $0. The K-1 will be all 0s if I only enter the $0 income portion of the distribution.
2. If I do have to enter the full amount on line 10, will my siblings have to file a 1099-NR if their only income is the tax exempt income reported on the K-1.
3. I do not understand why the K-1 line 14B would show foreign taxes paid since the estate will receive the credit and it will not be passed on to beneficiaries.
Thanks in advance for your help
