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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10830
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am filing an estate return for a mother who passed away.

Customer Question

I am filing an estate return for a mother who passed away. She named 6 individuals as beneficiarys of the will. On the estate return do I mark it as a simple estate return? Also since its an inheritance, would I need to add K-1's for the 6 individuals or would just the estate pay the tax due and no k-1s are issued?
Submitted: 5 months ago.
Category: Tax
Expert:  Lane replied 5 months ago.

Hi. My name's Lane. I can help you here.

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If you distribute all of the trust's accounting income in the Distributions section, the trust is a simple trust and, accordingly, mark the "Simple trust" box on Form 1041.

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And you WILL want to do that if there are any items of income at all, (interest, dividends, rents, capital gains fro the sale of an asset, etc).

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This is becasue EITHER the trust/estate OR the beneficiaries pay tax on these items, and trust/estate taxes are MUCH higher.

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Trust rates get to 39.6% at around 12,000 of income, but an individual doesn't get to that rate until they have $400,000+ of income.

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So yes, taking the distribution deduction for any taxable items of income and passing them out via the K-1 so that there is likely more left FOR the beneficiaries, after taxes, is what you'd want to do.

Expert:  Lane replied 5 months ago.

Please let me know if you have any questions at all, before rating me

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit") ... Otherwise I see no crediting for the work here.

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Thank you!

Lane

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.