IRA for deceased that passed to Estate

[Bonnie]

Taxpayer died with no will and no beneficiary for either of his two IRA's. I've never dealt with this so can the estate cash in the IRA's and use the funds to pay off debt and then distribute any remaining funds to the heirs? If so would the Estate file a tax return and pay the tax on the withdrawals from the IRA accounts

[New York Enrolled Agent]

IRC section 6012 states an estate is required to file a tax return if it has $600 or more in gross income in the taxable year. An estate can opt for a calendar year or a fiscal year for its taxable year. I presume the IRA value exceeds the $600 so a return will be required.

GENERALLY, it is advantageous for the income to be passed to the beneficiaries since estate tax rates reach higher thresholds more quickly as opposed to individual tax rates.