Estate Return Form 1041 Schedule B line 9 (Income Required to be Distributed Currently)

[user17722233565]

I'm working on Form 1041 for an estate which received a non-taxable legal settlement which was deposited to an estate bank account (no interest) and the money were distributed to the beneficiaries. 

What do I put on line 9 of Schedule B: the amount  distributed to the beneficiaries or zero since there was no income earned?

Thank You.

[M-MTax]

Based solely on the facts you stated, that line would not be relevant for your purposes.

[user17722233565]

Thank You. 

I understand that it doesn't make a difference because there is no taxable income.

Do I even need to produce Schedule K1 with zero income?

"Distributions to beneficiaries is the dispersal of income earned during the year from investments or other sources. Distributions can also be made from the original assets or principal left by the decedent or maker of the trust."

[M-MTax]

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@user17722233565 wrote:

Do I even need to produce Schedule K1 with zero income?

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No, you do not.

However, a K-1 with all zeros or blank at least lets the beneficiary(ies) know that there is nothing to report to the IRS with respect to their distribution.

[user17722233565]

What about Form 1041 Schedule B line 10 (other amounts paid, credited or required to be distributed)?

Do I enter the amount distributed to the beneficiaries or zero? 

I'm entering zero for line 9 because there was no income earned.

Thank You for you reply.

[M-MTax]

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@user17722233565 wrote:

What about Form 1041 Schedule B line 10....

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I have to apologize because I re-read your first post and noticed that you had a non-taxable settlement which begs the question as to whether there was any income or gain at all.

The point here is you don't have to bother filing a 1041 unless the estate had $600 or more in gross income for the tax year. If the settlement was all there was you could simply distribute it accordingly.

[user17722233565]

Hello,

Let me be more specific.

If non-taxable settlement amount was 20K and 15K was distributed to the beneficiary during the year out of non interest bank account,  is it correct to enter zeros on lines 9 and 10 of  Form1041 Schedule B. 

Thank You.

[M-MTax]

If there was nothing other than the non-taxable settlement, you don't have to file a 1041.