You have entered the tax withholding correctly. It is not allowed to be transferred to the beneficiaries. The estate will receive the refund.
- Except for backup withholding (see Form 1041 Instructions, page 34), withheld income tax can't be passed through to beneficiaries on either Schedule K-1 or Form 1041-T.
The distribution is the gross amount shown on the K-1 for the distributive share for each beneficiary and as distributable net income.
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