I am preparing the final 1041 for an estate. The estate existed for just under 2 years. In year 1 the executrix paid the lawyer $14,000. So there were $11,000 of non business deductions in excess of income. In year 2 the deductions in excess of income are $1500. Do both the $14,000 and the $1500 show up on the beneficiaries K-1 Forms as excess deductions upon termination or just the $1500?
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No. Only excess deductions for the year the estate is terminated are allowed on the beneficiary K-1s. And legal fees do not create an NOL, so you can't carry the excess deductions over to the next year.
That is why you don't pay the legal fees until the year the estate is terminated. -
1041 Final
Also be sure to accrue the accounting fees and deduct on the final return.Comment
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And the executor fees.Comment
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