We have an estate brokerage account with stock in it to be split 25% each to 4 beneficiaries. This is planned to be a "First and Final 1041" for the 2022 calendar year. Three beneficiaries want the estate Executrix to transfer their shares/portion of the account in-kind to a brokerage account they would create (so no capital gains incurred) while the one beneficiary wants the estate Executrix to sell right from the estate which would incur about a $6000 capital gain for the estate for his share and then have the estate send the proceeds directly to him.
It's been recommended from accountant and several others that it should be "all or nothing" with either Executrix selling everything out of the estate and distributing cash proceeds 25% each or all beneficiaris have their shares transferred in-kind to their own account outside of the estate account. Otherwise this can cause problems with pro-rata and K-1 distribution of capital gains, dividends and any deductions.
So question is how can TurboTax handle this situation on the "first and final 1041/K-1 forms" as the three beneficiaries who transferred their shares should not get any portion of the $6000 capital gain reflected on their forms while the remaining beneficiary that had his 25% sold from the estate with proceeds directly distributed to him should get all $6000 capital gains reflected on that K-1 form for him to pay taxes.
Additionally, there is a distribution of dividends and likely some expense in the estate that all four beneficiaries are entitled to 25% each that would need to be distributed so in this case everyone would have this reflected on their respective K-1 forms. Appreciate in advance of any insights on this.
Thanks deeMatrix
