Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

If the decedant estate has 1099 income, dividends and capital

gains in 2009 I know...
If the decedant estate has 1099 income, dividends and capital gains in 2009 I know I need to file a 1041 Estate Income Tax Return form the date of death until 12/31/09. In addition, I need to file a decedants tax return from 1/1/09 until date of death. My question is, if distributions are not made to the beneficiaries in 2009 do I still need to generate a K-1 for the beneficiaries? From what I understand, I would not need to generate a K-1 since the benficiaries did not receive a distribution and the estate would be subjected to the taxes not the beneficiaries. Also, if the estate does not have any 1099 income, interest of dividends for 2010 or if it is less than $600, a K-1 would not be generated for the beneficiaries either even if distributions were made in 2010 to the benficiaries. The intention is to move all the estate assets into a non interest bearing account for the remainder of 2009. Distributions will be made in 2010 to the beneficiaris thus not K-1 for 2009.
Show More
Show Less
Ask Your Own Tax Question
Answered in 49 minutes by:
10/13/2009
jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
Verified

Greetings,

 

You wrote: "I know I need to file a 1041 Estate Income Tax Return form the date of death until 12/31/09."

In most cases the estate is not required to use a calendar year so can file a full year return for the year beginning on the date of death rather than a short year return ending 12/31.

You can choose a calendar year; but it is not required.

The estate's first tax year may be any period of 12 months or less that ends on the last day of a month. Once chosen, the same tax year must be used unless a change of accounting method is chosen and approval is gained.

See http://www.irs.gov/pub/irs-pdf/i1041.pdf page 8 Accounting Periods.

 

It is technically correct that a beneficiary who receives no distribution or an allocation of an item of the estate does not need to receive a K-1. It may still be desirable to provide the Schedule K-1 to beneficiaries that will not have any distribution or an allocation of an item of the estate to demonstrate and document what was done.

Generally the Schedule K-1 is prepared as part of the 1041 tax return regardless of distributions or an allocation of an item of the estate to the beneficiary or not.

 

So, you may want to consider only filing one fiscal year Form 1041 if the distributions will occur less than one year after the date of death that would distribute the income and expenses to the beneficiaries.

 

A final K-1 is almost always required to be given to beneficaries because of distributions and allocated items. It is any distribution, whether income or corpus, that triggers the requirement.

 

You also may want to confer with counsel in regard to whether having the trust pay taxes that may be able to passed through to beneficiaries (generally at a lower tax rate) and using a non-interest bearing account (rather than investing and earning) fulfills the fiduciary duties of the executor or administrator of the estate.

 

I hope this helps for the general rules for accouting periods and issuing Schedule K-1.

Please ask if clarification is needed.

 

Best wishes.

 

 

 

 

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
Verified
jgordosea and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 8 years ago

The estate has not been distributed yet and is currently in a non interest bearing account. The 1099's will be less than $3k. From what I understand, if the assests are not distributed this year the Estate will pay the taxes on the earnings. In addition, since there is no distribution no K-1 is required.

 

Since the estate is in a non interest bearing account and when the assets are distributed to the beneficiaries in 2010 no K-1 is required since no 1099's will be generated on the estate.

 

In the end, I'm just trying to avoid K-1's for the benficiaries and if there are no 1099's in 2010 then I'm under the impression that it is not required to generate a K-1 since there is no income/interst to report.

 

Lastly, Couldn't I note on the 1041 that this is the final return since there will be no 1099's in 2010. In addition since there is no reportable income/interest a K-1 is not required as well. Thanks for you help.

Hello again,

 

You said: The estate has not been distributed yet and is currently in a non interest bearing account. The 1099's will be less than $3k. From what I understand, if the assests are not distributed this year the Estate will pay the taxes on the earnings. In addition, since there is no distribution no K-1 is required.

 

That is all correct so long as there are no other items that are allocable (which is likely).

You also said: In the end, I'm just trying to avoid K-1's for the benficiaries and if there are no 1099's in 2010 then I'm under the impression that it is not required to generate a K-1 since there is no income/interst to report.

 

That is not entirely correct.

Whenever the beneficiary gets a distribution - whether it is a distribution of income or of principal or both there should be a K-1 given to the beneficiary.

 

Also, there will be probably be allocable expenses in excess of income (since the income will be zero) that can be deducted in 2010 by the beneficiaries that get distirbutions.

 

The trust would not have to pay any tax if you use a fiscal year that will include distributions since the taxes would be paid by the beneficiaries that include the income in their claendar year when the estate fiscal year ends (2010 in this case). Usually the trust has to pay higher tax rates than individuals so your goal of not issuing K-1s may cost the trust some additional tax. Of course, you may still choose to do so.

 

Unfortunately there is no way not to issue a K-1 when there is a distibution (regardless of income).

 

I hope this helps to clarify for you.

Best regards.

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
Verified
jgordosea and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask jgordosea Your Own Question
jgordosea
jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
3,161 Satisfied Customers
Experience: I've prepared all types of taxes since 1987.

jgordosea is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

3,161 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Ied dividend and capital gains worksheet no longer
ied dividend and capital gains worksheet no longer available … read more
Carter McBride
Carter McBride
LLM
252 satisfied customers
What form do I use to send realestate capital gains payment.
What form do I use to send realestate capital gains payment … read more
abci168
abci168
Principal
27 satisfied customers
On form 1041, capital gains have to be taxed at the estate
On form 1041, capital gains have to be taxed at the estate level, correct? No distribution deduction may be taken?… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
What are the turm capital gains tax on properties that are
what are the long turm capital gains tax on properties that are in germany? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
I'm working to understand capital gains tax for California
I'm working to understand capital gains tax for California property purchased 4 years ago. It's a primary residence, purchased 4 years ago for $385k with $285k principle outstanding. Expected sale price of $630k … read more
abci168
abci168
Principal
27 satisfied customers
I'm canadian who want to understand capital gains tax rate.
Hi, i'm canadian who want to understand capital gains tax rate.I have a rental house that i bought at 500K. I sold it after 9 yrs at 1100K. With the money, i bought a new house (will be my primary res… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,798 satisfied customers
I have an IRA account and the beneficiary on the account is
I have an IRA account and the beneficiary on the account is a Trust that I set up. So if I die, the IRA money goes into the Trust. I would like to know how that IRA money is taxed if I die. My total e… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
What does "Distributions Other Than Dividend Distributions"
what does "Distributions Other Than Dividend Distributions" mean on a corporate tax return? Was the amount listed actually giving to the shareholder? … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
Estate capital gains tax rate for 61, single, unable to
estate capital gains tax rate for 61, single, unable to work, is claimed as a dependent form sister,only income collects $500 month stipend from gov., which pays for health insurance and meds. is gett… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
A Form 1041 is filed for a Credit Shelter Trust & shows a
A Form 1041 is filed for a Credit Shelter Trust & shows a loss on the Taxable Income line (Page 1, line 22). Is this loss carried forward?… read more
abci168
abci168
Principal
27 satisfied customers
What tax form is filed to report dividends paid by US Corp?
What tax form is filed to report dividends paid by a US Corp which is owned by a Canadian Corp? I think it might be 1042S. I want to know the rate of WH.… read more
abci168
abci168
Principal
27 satisfied customers
Form 1041 questions Where do you enter the 2k bond
Form 1041 questionsWhere do you enter the 2k bond premium-tax-exempt obligations on Form 1041. the 2k is shown on Form 1099-INT under Adjustments to interest and original issue discount… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I received a Schedule K-1 (Form 1041) from my aunt's estate
I received a Schedule K-1 (Form 1041) from my aunt's estate from which I received a distribution. In Part 3, Beneficiary's Share of Current Year Income, Deductions, Credits, and Other Items, there is … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
Same question on the taxation of interest and dividends (on
Same question on the taxation of interest and dividends (on mutual funds) earned inside a disclaimed portion trust ... disclaimer trust . The original owner of a trust passed and the spouse declined a… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Rules on Rollovers (Return of a non-taxed IRA Distribution).
Rules on Rollovers (Return of a non-taxed IRA Distribution). Over 70-1/2 years old) … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Schedule K-1 Form 1041: Irrevocal Life Insurance Trust: Tax
Schedule K-1 Form 1041: Irrevocal Life Insurance Trust: Tax asking if I disposed of my entire interest? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
If an estate received a Schedule K-1 in 2016 but no income
If an estate received a Schedule K-1 in 2016 but no income until 2017, do I file a estate tax return (Form 1041) for 2016 as the personal representative / administrator of the estate?… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I have a schedule K-1 Beneficiary's share of income,
I have a schedule K-1 Beneficiary's share of income, Deductions, Credits, etc. Line 5 shows 31,171, line 14 code E shows 1092, line 14H shows -30186. Do I owe tax on 31171 or just 1092. … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x