I am the executor of a an estate. I made an initial distribution to the beneficiaries in 2019. Which box do I report this in the K-1?

[MacGruff]

I am the Executor of a small estate. There are three beneficiaries and over the course of 2019, I made an initial distribution of the assets to the beneficiaries which resulted from the sale of the decedent's house. There was no capital gain due to the sale of the house and I am not passing along any of the income accrued due to the estate getting interest on the money sitting in the bank.

I know I have to provide a K-1 to each of the beneficiaries, but am not sure which box I report the distribution in. There was no capital gain and no interest income involved. So boxes 1, 3, and 4a will all show $0. But which box gets the dollar amounts that were distributed?

Thanks!

[Anonymous_]

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@MacGruff wrote:

I know I have to provide a K-1 to each of the beneficiaries, but am not sure which box I report the distribution in.

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K-1s (Form 1041) are used to report items of income, gain, deductions, credits, et al; they do not generally report distributions of corpus (principal).

You can still file and issue K-1s that show $0 in the boxes you mentioned, and many tax professionals consider it a good practice to do so, as it provides confirmation to the beneficiaries that the distribution, if any, is not taxable to them.

[MacGruff]

That's great, but don't I have to report somewhere that a distribution was made?

[Critter · Accepted solution]

Again...distributions of the corpus is not reported on an income tax return since it was not income. 

[MacGruff]

Thanks. That is very clear. Appreciate it.

[DaveF1006]

Are you using Turbo Tax Business? If so, you would not put this on a K1,because the program does this automatically by entering information in the program.

1. First step is to go to General Info>beneficiary information 
2. once this is entered, then federal taxes>income>deductions (if any)
3. Go to Federal Taxes>distributions here it will have a listing of each beneficiary and you will enter the income that is to be distributed to each beneficiary according to the type of income it is. The information you put into this section will automatically transfer to the K1 on each beneficiary you have listed in step 1. 

Now if you are not using turbo Tax and reporting this by hand, the Ki form itself should have several different income types ranging from interest income, royally income, business income etc. You must list the distribution inn accordance to the type of income it is.This could be tedious so this is why i suggest you use the program and let the program determine how the K1 should appear for each beneficiary. 

[MacGruff]

I am not using Turbo Tax for Business. I am using Premier, but executor duties are not really covered in that program so I ended up doing it all manually.

[Critter]

The form 1041 is not in any of the personal tax programs like Premiere ... it is in a separate program called BUSINESS.