1099S in Estates name

[tracyb]

1099S is in Estates name and tax id for inherited property sold in 2016. Preparing 1041 with Sch D gain. Would the tax liability on the gain be paid by the estate or allocated K-1 flow through to beneficiaries?

[Roland Slugg]

If the income was distributed to the beneficiaries, leaving little or no taxable income on the estate's tax return, then they ... the benes ... will report their respective shares of the gain on their own tax returns. If the income was not distributed to the benes, the estate will have to pay the tax.

In most cases it is usually a good idea for an estate or trust to distribute its income, as the 1041 tax rates climb very steeply.