tell us the codes in box 7 and type of asset. Some may mean the amount isn't taxable.
estate taxes are where the individual dies with a net worth of over $10 million. The assets and liabilities are reported on form 706 and estate taxes are paid on the taxable amount. What you got was a distribution from any of the many types of accounts the decedent owned such as annuities, traditional IRA, pension plan, etc. If it's taxable a 1041 needs to be filed and income taxes paid.
if it is taxable the Trustee may be able to use IRC section 663(b) to distribute the income to the beneficiaries and they pay the tax if the income is taxable.
Section 663 (b) of the U.S. tax code allows fiduciaries of estates and complex trusts to elect into what is informally known as the “65-day election.” The 65-day election gives fiduciaries an additional 65 days after the end of the fiscal year to make beneficiary distributions and still be able to report them on their prior-year tax return.
we know nothing about the estate (did the decedent die without a will - intestate) or was the asset held by a trust. then the trust document might dictate the disposition of this income. Still, in many states, the trustee has some discretion as to asset distribution. Then the income tax laws come into see what the tax effects are.
if the Trustee is not familiar with state trust and/or tax laws they should consult a tax pro
Section 663 (b) of the U.S. tax code allows fiduciaries of estates and complex trusts to elect into what is informally known as the “65-day election.” The 65-day election gives fiduciaries/trustee 65 days after the end of the fiscal year to make beneficiary distributions and still be able to report them on their prior-year tax return.
