Form 1041 Question

[Unregistered]

I am preparing the final return for a decedent's estate. Income consist of $ 600.00
interest and $ 65,000.00 IRA Distribution. Deductions for fiduciary fees, attorney and
accountant's fees is about $7,000.00. Should all of the $65,600.00 income plus unused
deductions (since it is final year) be passed through to the heirs by using the K-1's, or
could I subtract the deductions from the income on the 1041 and then pass the remainder
($58,600.00) through to the heirs on the K-1's?

[Mark Goldberg]

1041

Reduce the income on form 1041 and then pass the remaining income along to the beni's on K-1 forms.

[Snaggletooth]

No Distribution Required

Not required (for tax purposes) to distribute anything, but at some point it becomes ridiculous to sit on the money.

Estate tax rates are higher, although the individuals may have a higher rate because of income levels.

At some point, everything will be have to distributed, and if you don't, the estate will needlessly remain open. Exactly how much gets passed through is between you and the heirs -- but at some point, they will have to bite the bullet.

Also an estate (unlike a trust) has a much higher potential for double taxation on undistributed income that later gets settled.