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February 13, 2020
Question

For a decedent, I prepared a 1041. Under the will, distributions were made to named beneficiaries. None of these distributions showed up on the K-1s. Why not?

  • February 13, 2020
  • 2 replies
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2 replies

Carl11_2
Employee
February 13, 2020

Just to provide clarity for others reading this. The 1041-Estates and Trusts tax return is not prepared for descendants. It's prepared for estates.

None of these distributions showed up on the K-1s. Why not?

If the distributions were inherited due to the passing of the person the estate is for, it's because an inheritance of less than $11.2M is not taxable or reportable on the beneficiary recipient's tax return. But any earnings on anything that the deceased had which accumulated since the passing of the deceased would be taxable income to the beneficiary recipient *unless* the estate paid the taxes prior to the date of distribution. In that case, there would be nothing taxable or reportable on the K-1 issued to the beneficiary recipient. All the K-1 really does is show the IRS that the estate did "in fact" make the distribution. This is required, as the estate "must" show the disposition of everything in the estate, before the estate can be dissolved.

Employee
February 13, 2020

Are you using TurboTax Business? If so, did you go through the Distributions section?

 

Distributions typically only appear on K-1s (1041) for estates/trusts to the extent of DNI (distributable net income); distributions of principal (corpus) do not appear on K-1s since K-1s report items of income, gain, deductions, credits.