@Allan712 wrote:
The Estate Sold the Home and the proceeds were distributed.
The estate did not distribute the proceeds of the sale. It distributed what was left of the proceeds after paying off the mortgage. Is that the amount that was reported as the proceeds of the sale on the Form 1041 estate tax return? When the sale is reported, the amount that has to be reported as proceeds is the full selling price, before paying off the mortgage. The mortgage payoff does not reduce the taxable gain from the sale.
From what you wrote, it sounds like the amount reported as proceeds of the sale was not the correct full amount. There may have been other problems in the tax reporting as well.
