1041 Estate Tax Return

[Terry D EA]

Client handled mother's death without an attorney and I might say it seems he did pretty good. He applied for an EIN for the estate. The only income to the estate was proceeds from a 401K that had taxes deducted and was issued to the Estate with the Estate's EIN number. Client deducted all expenses and distributed the remainder equal between himself and brother which was in line with the deceased's will. It appears this should be fairly simple 1041. Because the estate paid the tax on the distribution from the 401K, the funds distributed to the bene's should be tax free correct? Been a while since I have done one of these.

[grandmabee]

I thought on a final estate return income and expenses passed on to bene

[Terry D EA]

I am pretty sure you are correct. Also, the tax withholdings passes on to the bene as well which should not have a major impact. One thing confuses me, and I didn't see the will, but according to the client, everything was split 50/50 with this brother so why was the 401K withdrawal was sent to the estate and not the bene. The outcome is going to almost the same.

[Lynn EA USTCP in Louisiana]

IRa's, 401k's are distributed to their named beneficiaries.  If there was no named beneficiary then they go to the estate. 

[Terry D EA]

Ah, thanks Lynn I hadn't thought of that and it makes perfect sense.