First, did you step up the basis in the house to date of death market value? Depending on the time the house was sold, there should not have been much if any gain after deducting the closing costs from the proceeds. Next, make sure you marked the return in TurboTax Business as "Final". There should not be any tax due on the final estate 1041 as all the income is passed out to the beneficiaries. Also, make sure and deduct all expenses on the final return including legal, court costs, and accounting. But yes, if you had income left in the estate, it should be passed out to the beneficiaries and taxed at the beneficiary level with each getting a K1 and not on the estate return.
