I am completing an estate tax return form 1041. The deceased inherited money that included a net long term capital gain of $10,000. The deceased estate received a K1 form. The gain was passed from the other estate to my persons estate but I can not pass it to my persons heirs for tax purposes - they do get the money. The estate is being taxed on this amount with all other income being passed on to heirs. Can I get around this? I thought all inherited income could pass on to heirs for tax purposes. Unfortunately I do not have the money to pay this in the estate - I will have to pay it myself. I thought all inherited income would be passed on for taxation to the heirs.
