Inherited investment account

Forum|Forum|1 year ago
August 7, 2025
3 replies
90 views

Good morning,

My mother passed away in May 2024 and I am filing her estate 1041 due in August 2025. My question regards her investment accounts. She had listed myself and my siblings as beneficiaries on the investment accounts.

How do I treat capital gains and dividends earned after her death but before the funds were transferred to her named beneficiaries? I'd like to just include the amounts in income on the 1041 and let the estate be responsible for any taxes due. I'd like to do this to avoid issuing K1's and because my probate fees give me a NOL on my 1041.

Thank you for your help!

Best answer by dmertz

"She had listed myself and my siblings as beneficiaries on the investment accounts."

In that case, the capital gains and dividend distributions made after your mother's death are income of the beneficiaries, not income of the estate, so this income does not go anywhere on Form 1041. If this income was reported on a Form 1099-DIV issued to your mother rather than to the beneficiaries, the preparer of your mother's final individual tax return (Form 1040) should forward the income to the beneficiaries using the nominee process and the beneficiaries will report the income on their own tax returns. (Because beneficiaries other than the estate were designated, the estate is not involved,)

Bsch4477

Level 15

The estate pays the tax on income owned by the estate generated before the distribution of the estate assets.

dmertzAnswer

Level 15

"She had listed myself and my siblings as beneficiaries on the investment accounts."

M-MTax

Level 15

I agree with @dmertz.

Also, if you do need to file a 1041 for other income of the estate, you should be aware that probate fees (and the like) would not, by themselves, create an NOL; they would be final year deductions that could be passed through to the beneficiaries.