1041 estate return - What do I put in the box when TT asks how much I distributed to each beneficiary?

Forum|Forum|4 years ago
August 23, 2021
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I completed a 1041 Estate return last year for my father. I did the step by step. When Turbotax asked "How much was distributed to each beneficiary?" and "Enter the amount distributed to each beneficiary" I entered the entire amount I distributed to each of the 3 beneficiaries (equal amounts 1/3 of total). Not only income.

I am now completing a 1041 for my brother's estate and I realize should have only entered the income distributed when turbotax asked how much was distributed-not the entire distribution. The K1s I did for the first return are incorrect - I need to amend them and hopefully get it right this time. So I want to make sure I understand.

I distributed a large amount of stock and cash, and did an NUA distribution of the deceased 401K and distributed. This time I have only one beneficiary. When Turbotax asks how much I distributed, do I just put the estate income from the 1099s in the box? Or do I put the amount of owed income (schedule B line 15) after deductions. (I assume the entire distribution is not reported.)

An additional question - I see that Net Unrealized Appreciation is considered IRD. Do I have to do anything special with this or just enter the income as shown on the 1099R?

Thank You

A

Anonymous_

Employee

If the estate received the IRD, then the estate would report it on its federal income tax return (1041).

You can enter the entire amount distributed since only the actual income will flow through to the beneficiary (i.e., income/gain, not principal, will appear on the beneficiary's K-1 to the extent of DNI).

M

MatildaAuthor

Employee

Thank You.

You are correct - the amounts shown in Part III of the K1s for the previous estate return are 1/3 of the income. So they are correct.

The amount shown in the smart worksheet A-1 "Income required to be distributed" is incorrect and is the entire distribution amount. I guess that is not used anywhere so I should not bother amending the K1 forms?

I have now entered it correctly on the current 1041 I am working on.

I do think TT should change their question in the step by step to say 'How much income was distributed' instead of simply 'How much was distributed'.

Thank You for your help