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inheritance 1040 and K1

Our dad passed in April 2023. He left his 2 brokerage accounts to his 3 daughters in a Trust. The EIN entity created after his passing for the trust and brokerage account shows total dividends $30,000.00, ($19,000.00 in the first trust account and $10,000.00 in the trust brokerage account) year to date. All dividend income accrued on the 2 accounts are currently reported solely on our EIN on the brokerage website, including the distributions before Dad's passing. I am not sure if the brokerage house will report the total dividend earnings on the 1099 dividend for the EIN or if they will separate those earnings that occurred before the date of our fathers passing and report it for his social security number. If they do not separate out the dividend earnings, do we do that on a separate 1041 for Dad's Social security number issuing him a K1 or are we, his daughters, responsible for the total income  on our 1041 form and K1's. This will impact our estimated tax payments for 2023 and we wish to avoid any penalties for underpayment, so it is important that we clarify what will be our earnings.

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2 Replies

inheritance 1040 and K1

With millions of dollars at stake, run-don’t walk-to a financial/tax planner in your area. 

inheritance 1040 and K1

I am sorry for your loss.

 

You need to contact the brokerage firm(s) for a definitive answer with respect to the 1099s.

 

However, you would report dividends earned prior to your father's passing on his 1040 using his social security number (if a return is required to be filed).

 

Dividends earned thereafter (in the trust) would be reported on a 1041 with K-1s issued to the (primary) beneficiaries named in the trust.

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