Form 1041 Estate

[sirgalavant]

My husband passed away in 2020 and received a 1099-Misc of $13k for unused vacation pay.  The funds were deposited in an estate account.  I've reported $13K on line 8 "Other Income" and took $200 of Other deductions on line 15a.  Line 21 I claimed the $600 exemption.  I'm lost as to if

I now pay estate taxes on the $13k-$200-$600=$12,200

($1904 + 35% of amount over$9450) From the 2020 tax rate schedule for 1041.

The money has been distributed to me (spouse), so can I just claim the $12,200 on my 1040 tax return?  If so, what do I put  1041 Schedule B and do I need to fill out a 1041 K-1

[tagteam]

Yes, you get an income distribution deduction so the estate should not be liable for any federal income tax.

Rather, the income is passed through to you, as the beneficiary.

[sirgalavant]

Would I need to fill out the 1041 K-1 to transfer the tax liability to me and my 1040?   Or,

do I not pay taxes at all on the income distribution?

thank you!

[tagteam]

Yes. The estate had gross income of $600 or more so a return would need to be filed.

[sirgalavant]

OK.  I've completed the 1041 and my bottom line on Schedule B is $12,200.

Now I'm completing the 1041 K-1 to show the income distribution to me the spouse.

On K-1, line 10 - I put $600 for the Line 10 "Estate tax deduction", where do I put the $12,200 that was

disbursed to me?  This is the initial & final 1041 being filed and the Income was IRD

(vacation pay) earned prior to death with no interest/dividends/gains earned.  So, distribution of the corpus.

[tagteam]

The $600 exemption is not entered on your K-1; that is not part of the equation for an initial and final return with a complete distribution to the beneficiaries (only when there is net income for the estate).

If you completed Schedule B, properly, then you should have a figure for DNI.

Regardless, the distribution on your K-1 should be in the neighborhood of $12,800 (from the information you posted) and that figure would appear on Line 5 (in Part III).

[sirgalavant]

thank you.  This is response helped a lot.