I know it is late to the date of filing but this was just dumped in my lap by my husband (1 of 2 executors for Dad's estate) as the hired accountant put the estate on hold until AFTER tax deadline. Here is where I struggle.
The estate account was created using the balance of checking/savings account, the sale of the family's home (below market value for the area) and the sale of personal property. All of this is considered corpus correct?
- The beneficiaries received around $95,000 for 1st distribution from the estate last year. There isn't any income to the account, outside of what I mentioned. So I don't have to file a 1041 for 2022 as there are no gains above $600 - do I understand that correctly? If not, can I wait and generate the K-1 information for total distribution to benefactors when I file and close the estate??
- The estate still has property in another state that has to be sold. If the timber on the property is harvested and sold, then the property is sold, the timber would be an income gain for the estate but not the property - correct? Then I would file a 1041 for the estate for the year this occurs showing the gain only.
This estate has a trust in which a beneficiary's share from the 1st distribution of the estate was placed so it would not be squandered away but used to purchase a permanent home for the beneficiary (2022). The home was purchased below FMV and the trust paid for the home plus property taxes and other fees. The trust owns the home and will be passed on to the beneficiary's surviving child when the beneficiary passes.
- Does the trust need to file a 1041 since purchasing the home from funds received from the estate? Does the trust gather the information for a K-1 to show that $6,000 from the trust was distributed to the beneficiary? Are there taxes due when monies comes from a trust versus an estate?
- Is the home treated as a gain, income, or corpus to the trust? Unless some very major improvements are done to the house, I do not think it will ever really appreciate over time. The trust has enough current funds to cover property taxes for the next 5-8 years, maybe longer.
- This trust will gain additional deposits from the estate when all the rest of the property is valued and sold and the estate is closed.
I am sure I will have more questions before tomorrow night. Thank you all for helping me out on short notice.
/hugs
Shabbate
