Completion of 1041's and more

[desert1]

If anyone could help with some issues I'm having I would greatly appreciate it. 

My Questions:

• Can I have an initial and final 1041 at the same time and then end this by turning in my Form 56? or do I need to carry into 2024? 
• Do I need to check either of the trust boxes? This is just an estate with a will. 
• Is the nominee treatment of 1099-Int and Div correct by going to the estate?
•  Schedule B Income Deduction Distribution -How is Line 9 calculated (Income required to be distributed currently) Is that supposed to be the current earnings? and,
• What about line 10 (other amounts paid or required to be distributed) and
• 11-Total distributions: the entire estate was an inheritance/bequest/joint ownership.  If we are not supposed to show those items as distributed income, what is left?

 Background:

My sister and I are co-beneficiaries with a 50-50 split of my mom's estate.  I was a joint owner with my mom on her financial accounts and my sister and I were listed as beneficiaries on her stock holdings with the accounts pre-split.  No debt, no real property or anything of consequence that needed appraisals.  

I completed Mom's 1040 for 1/1-1/31 last year which included the months’ worth of interest and dividend income + 1 month of Social Security.  There was also a capital loss carryover with Zero taxable income. 

For the 1041 there were additional stock dividends issued after her death, prior to the transfer of ownership, and interest income that together exceeded $600. There was also a capital loss carryover shown on 1041-Schedule D (no transactions in reporting year).  

The 1099's were issued in her SSN, so on the 1040, I entered the amount earned outside the first month as nominee and am carrying the balance to the 1041. I am assuming that can be allocated between my sister and me on the K-1's. (Or should I report the bank interest all under my SSN since I was a joint owner?)   

All but one of the cash accounts has been distributed. (the remainder being set aside until final taxes etc. are complete) and the stocks have all transferred, so the distribution seems complete to me and there will not be anything to earn income next year within the estate.

Respectfully in your debt for any assistance you can provide.

[RobertB4444]

An initial and final return on the same form is not only ok it is preferred.

Everything entered should pass equally to you and your sister.  So if there is some interest that account earned you should probably give it to her.

Everything else you're doing just fine.

@desert1 

[desert1]

Hello RobertB4444,

First, thank you so much for your feedback on the 12th.  Unfortunately, I was unable to get back to the task until today, so I've not finished but do have a couple more questions.

Before I finish up and start calculating the tax and doing the K'1s, could you let me know if I have the right numbers? for the right places? If you don't mind, I'll do this by the items I'm confused by. 

After income and dividends are identified as $ earned post-death, but pre-distribution to the beneficiaries: 

• Is it correct on Income (2)b that qualified dividends are allocated to the Estate and not the beneficiaries since the earnings were attributed to the estate? 
• Schedule B item 9, income required to be distributed currently.  Does that include all of the $ received, including income for both the estate and what went to my mom on her final 1040 and was included in the accounts I paid out? 
• Line 10- Other accounts paid, credited or otherwise required to be distributed; would I enter a tax refund that came for 2022 in July of 23?  (I know it's not income, but was another amount paid out to the beneficiaries.)

As it stands, I have distributed all account balances, allocated 50-50, and except for one account that is being kept for contingencies and to receive mom's 2023 refund from the1040 final we look to be complete. My rough estimate shows no tax will be owed, basically due to the income distribution deduction. 

So, then, I just mark the initial and final return for a decedent's estate, prepare the K-1's, sign, dot my i's and cross my t's and that's it? Oh yes, I send in Form 56 to revoke my fiduciary relationship for this tax matter.

You are so great to help out with these questions. This was quite an experience and I appreciate your kindness and patience. 

Very respectfully,

desert1

[AmyC]

1. Yes, the estate earned the income so it is all estate income.

2. Yes

3. Yes

Since you are marking it as a final return with the estate closing out, all income must be distributed.