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BASS-FISHERMAN
Returning Member

Does a life insurance policy my father paid for and left to his estate count as income ? if so what line on 1041?

 
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AmyT
New Member

Does a life insurance policy my father paid for and left to his estate count as income ? if so what line on 1041?

The proceeds from a decedent's life insurance policy paid by reason of his or her death generally are excluded from income. The exclusion applies to any beneficiary, whether a family member or other individual, a corporation, a partnership, or an estate.

Based on what you have posted, the estate may have had a little bit of interest income.  If this amount was $600 or less, you will not need to file a fiduciary return (Form 1041) for the estate.  If no 1041 is filed, there will not be K-1s issued for the beneficiaries.

Additionally, there will be no income for any of the beneficiaries to report on their tax returns.  Distributions from an estate are not considered to be taxable income.

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4 Replies
AmyT
New Member

Does a life insurance policy my father paid for and left to his estate count as income ? if so what line on 1041?

Was the estate the beneficiary of the life insurance policy, or were individuals named as the beneficiaries?
BASS-FISHERMAN
Returning Member

Does a life insurance policy my father paid for and left to his estate count as income ? if so what line on 1041?

The estate was named as the beneficiary
BASS-FISHERMAN
Returning Member

Does a life insurance policy my father paid for and left to his estate count as income ? if so what line on 1041?

The children were given $3300 each out of the $12000 estate account. There was no income for the estate in 2016 since my father died 0n Jan 24, 2016. All he had was a checking account. Is the checking account treated as income and is a K-1 form necessary for the beneficiaries of the checking account?
AmyT
New Member

Does a life insurance policy my father paid for and left to his estate count as income ? if so what line on 1041?

The proceeds from a decedent's life insurance policy paid by reason of his or her death generally are excluded from income. The exclusion applies to any beneficiary, whether a family member or other individual, a corporation, a partnership, or an estate.

Based on what you have posted, the estate may have had a little bit of interest income.  If this amount was $600 or less, you will not need to file a fiduciary return (Form 1041) for the estate.  If no 1041 is filed, there will not be K-1s issued for the beneficiaries.

Additionally, there will be no income for any of the beneficiaries to report on their tax returns.  Distributions from an estate are not considered to be taxable income.

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