Form 1041 - Estate and K-1


G

Gene Bleuler

I'm filling out the Form 1041 which is the first and last Estate Income Tax
return for someone who died in 2007. All monies have been distributed.

The estate will be taking all the income-- not allocating any to the
beneficiaries. So do I still need to submit Form K-1 with it?
 
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G

Gene E. Utterback, EA, RFC, ABA

Gene Bleuler said:
I'm filling out the Form 1041 which is the first and last Estate Income
Tax return for someone who died in 2007. All monies have been distributed.

The estate will be taking all the income-- not allocating any to the
beneficiaries. So do I still need to submit Form K-1 with it?
Maybe, I would prep and send one even if it had all zeros on it.

BUT I must ask, exactly what do you mean by "the estate will be taking all
the income"? Does this mean that the estate will be paying all the tax on
the income? If so, you should be aware that estates generally pay tax at
the highest individual rates once a minimal level of income is reached. So
having the estate pay the tax could cost much more than passing the income
through to the beneficiaries.

Gene E. Utterback, EA, RFC, ABA
 
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G

Gene Bleuler

Gene E. Utterback said:
Maybe, I would prep and send one even if it had all zeros on it.

BUT I must ask, exactly what do you mean by "the estate will be taking all
the income"? Does this mean that the estate will be paying all the tax on
the income? If so, you should be aware that estates generally pay tax at
the highest individual rates once a minimal level of income is reached.
So having the estate pay the tax could cost much more than passing the
income through to the beneficiaries.

Gene E. Utterback, EA, RFC, ABA

Well that's what I was thinking of doing-- figuring the estate (and the
beneficiaries) would be more likely to stay "under the radar" and not get an
extra hard look, much less an audit.

The amount of the estate's net income for 2008 was about $45,000 with 40,000
of this from the gain on an annuity.
 

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