You are correct. The filing requirement for estates and trusts (Form 1041) is taxable income of $600 or more. If your estate does not meet that amount then a tax return is not required to be filed. The corpus is not income. The corpus of a trust is the sum of money or property that is set aside to produce income for a named beneficiary.
If you should receive a letter from the IRS, (not likely unless they have income documents that indicate a return should be filed) you can show proof of income and that it did not meet filing requirements.
Deductions are not required to be reported when a tax return is not required and as you indicated would not provide benefit to the estate.
You can file the first and final return when the estate assets are sold. Any gain or loss would flow through the K-1, from the estate return, to the beneficiary and get reported on the individual return.
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