Form 1041 K-1

Forum|Forum|1 year ago
March 3, 2025
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I am preparing Form 1041 and K-1s for my mother's estate. We sold her home, and the proceeds were distributed to all beneficiaries. These distributions are showing on the K-1's Beneficiary Allocation Smart Worksheet. However, due to stepping up the basis and expenses, we are actually reporting a loss on the sale of the house. So, the K-1's are not showing anything in lines 1-14. Does this sound right, or is something going wrong in TurboTax? Do I still need to distribute the K-1s if there is no income for beneficiaries to record on their 1040s?

TurboTax Business Windows

Best answer by M-MTax

That was a misunderstanding on my part and you are absolutely correct; the losses should not be distributed until the final return is prepared and filed.

Also, you do not need to distribute K-1s if there is no income, gain, deductions, or credits to distribute thereon.

M-MTax

You can definitely pass through a loss in your situation, but TurboTax does not appear to like passing through losses when there is no income or gain to pass through to the beneficiaries.

You can try to pass through some nominal amount of income, such as a dollar or ten dollars, and then the loss should flow through to the K-1s.

MZVAAuthor

As I understand it, the losses shouldn’t be distributed until we are filing the final return for the estate. My real concern is whether I need to distribute these K-1s at all if they won’t affect our individual 1040s.

M-MTaxAnswer

That was a misunderstanding on my part and you are absolutely correct; the losses should not be distributed until the final return is prepared and filed.

Also, you do not need to distribute K-1s if there is no income, gain, deductions, or credits to distribute thereon.