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For the year 2008, do I need to do a 1041. If so, this is what

Customer Question
I have and should it...
For the year 2008, do I need to do a 1041. If so, this is what I have and should it go on a 1041: Interest income ($4413), Total ordinary dividends ($ 16,387), Total capital gains &
losses -schedule D 10,010.Total schedule E with royalties and K-1's, 19,034, Oklahoma
state refund 136, total income of 49,980. Expense of contribution of 595, professional expense 16,303, total of 16,898 deduction, less 600 exemption leaving 32,482 taxable and
tax due of 5,966. Looking under federal tax law estate or inheritance tax unified credit
is 1,455,800 and tax exclusion of 3,500,000, so please help help,which is it, do we prepare
1041 or do not prepare 1041.Thank you. XXXXX email address [email protected]
Submitted: 6 years ago.Category: Tax
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Answered in 19 minutes by:
1/3/2011
Tax Professional: RD, Certified Public Accountant (CPA) replied 6 years ago
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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RD :

The income details that you provided - does it belong to an estate? or is it earned in a trust?

Customer :

It is an estate.

RD :

In that case you need to file Form 1041 (income tax return for an estate) and report the income on the income tax return.

RD :

Taxes will be due on the net tax income.

RD :

net taxable income.

Customer :

But, for 2008 under the federal tax law it shows estate or inheritance tax unified credit is 780,000 and tax exclusion of 2, 000,000. So, why does this not apply to the 32,000 owed?

RD :

What you are looking at is whether there is any estate tax due. Estate tax is calculated on the value of the all the assets less the liabilities less the exclusion.

RD :

But, this is the income tax on the income earned on the assets in the estate

RD :

and is different from the estate tax

RD :

and hence, a filing is required until the assets are distributed out of the estate to the beneficiaries.

RD
RD, Certified Public Accountant (CPA)
Category: Tax
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