Supporting statements for Schedule K-1s

[Gbird101]

I am filing a 1041 as Executor of my mother's Estate. For Schedule K-1s, certain income and deduction items have been coded. The IRS states those figures need supporting statements attached to the K-1s.

2 Questions:

(1) one of the codes ( E for net investment expenses ) refers to the proceeds of selling the deceased home.

So should the statement reflect the breakdown of the sale - gross proceeds less expenses, such as legal and real estate fees, less adjusted cost basis?

(2) should supporting statements be attached for ALL income and deductions reported on 1041? or not necessary?

Thank you for your help,

Gbird101

[M-MTax]

Generally, you just need to provide the K-1 to the beneficiary(ies) who, in turn, input the data into their individual income tax return(s). There are instances where it is useful (and necessary) to provide basis information, typically when property is distributed in kind.

I believe you mean to write "net investment income" since a gain from the sale of the home might be subject to the Net Investment Income Tax (NIIT). That would appear on Line 14 with an "E" code. The beneficiaries simply need to input that figure into their tax programs (or their tax preparers do). The executor should retain all of the supporting documents.