The estate is about 240K. 120K goes to charity. 120K goes to several friends. Included in the 240K is 60K taxable income from annuities. Does the 120K in charity eliminate tax for the beneficiaries? If so, how does it show on the 1041? Thanks.
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An estate may deduct charitable contributions, up to the amount of its income, if the contributions are paid in accordance with the governing instrument. (Code ยง642(c)(1))
On F-1041 report the $60k of annuity income on line 8, and report $60k of the $120k of charitable contributions on Schedule A of F-1041, then on line 13. This will zero-out the estate's income that would otherwise be taxable to the estate or its beneficiaries.
The excess charitable contributions do not flow through to the beneficiaries.
In the OP you said this is an estate. If it's actually a trust, it works a little differently, and the trust should file form 1041-A.Roland Slugg
"I do what I can." -
Leave Annuities to Charity
If this is an estate, what would be wrong to simply allowing the charities to inherit the annuities? The income accruing to the charities is tax free, is it not?Comment
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