Dividends of decease

[nosillo2]

Dividends were divided on decease tax return and estate tax return in Turbotax manually.  The 1099 showed all dividends going to decease.  There is no where in Turbotax to put EIN number on decease tax return, and an estate tax return will be filed.  The payor of dividends will not divide dividends to respective account.  How should this be handled with IRS?

Ann

[AmyC · Accepted solution]

The IRS understands the situation and is aware that providers don't break things up. As long as you enter the correct amount on each return, you are fine.

The IRS does have forms you can file, but those are really meant for passing income to another person. You could do a nominee for the dividends, General Instructions for Certain Information Returns. It is not expected in your position but if it makes you feel better, you could issue a 1099-DIV from the individual to the estate.

[nosillo2 · Accepted solution]

Are the stocks transferred  to beneficiaries included in K-1 distribution?  If so, is it included on Form 1041 or just added on K-1? Should a gain/loss be reflected?

On Schedule D Part III under 1 (beneficiaries) is blank should it be filled in with amounts reflected under Estate column so it can rollover to distributable income for schedule k-1  form?

Thanks

[RogerD1 · Accepted solution]

No, stocks that were not sold but were distributed directly to beneficiaries do not need to be reported on a Form 1041.  There is nothing taxable for stocks that were transferred directly to a beneficiary.

If the stocks were sold by the trustee/executor, then these sales would get reported on the Form 1041 and the gain (or loss) on the sale would get distributed to each beneficiary via a K-1 form.  Do realize that any inherited stock has a basis value per share on the date of the decedent's passing.

[nosillo2]

The deceased received a 1099-G from state because itemized on final return submitted for 2024 instead of standard deduction, and a 1099-INT from IRS.  In turbotax should those two items be entered under other income so an explanation can be provided on the 1041?

Where are probate fees reported in turbotax business?

If no distributions are made is a K-1 still issued?

What is the state tax deduction in turbotax business?

Thanks,

[nosillo2]

It suppose had read "what is the estate tax deduction in turbotax business"?

[DianeW777]

Yes, interest and state tax refund can be reported as Other income on Form 1041. The probate fees, as well as possible other fees directly related to administering the estate will go on Line 12-Fiduciary Fees, also see Line 15a. See the link below for the explanation for Line 12, and other instructions for Form 1041.

• IRS Form 1041 Instructions

Line 19 is the estate tax deduction and is described here for your convenience.

• If the estate or trust includes income in respect of the decedent (IRD) in its gross income, and such amount was included in the decedent’s gross estate for estate tax purposes, the estate or trust is allowed to deduct in the same tax year that the income is included that portion of the estate tax imposed on the decedent’s estate that is attributable to the inclusion of the IRD in the decedent’s estate. For an example of the computation, see Regulations section 1.691(c)-1 and Pub. 559.
  • Simply put this explains how to avoid double taxation on Income in Respect of a Decedent (IRD) by allowing estates or trusts to deduct the federal estate tax paid on that specific income. 

@nosillo2