Income Form 1041

[TAXMAN]

My brain is already cooked due to summer heat. Life insurance paid to the estate. No estate return required., But a (first and final 1041) is being required. Would the life insurance benefits be included in the 1041 as income to be passed out to the heirs? Beneficary on life ins forms said payable to the estate. Your thoughts please.

[OldJack]

Remember the 1041 is a deceased/estate "income tax return" not a form to report distributions of assets.  If it is taxable income to the deceased or estate then it is reported on the 1041 otherwise it is not.

[SaraEA]

Life insurance is not taxable to the beneficiaries, in this case the estate.  It may be included in state Probate filings, however, depending on the state.

[OldJack]

The only form that shows actual asset distribution (other than taxable income) is the estate tax return which you say is not needed in this case. 

[TAXMAN]

Total value of the estate was about 125k including a small life insurance paid to the estate. What was triggering the 1041 was dividends received and sales of some stock to pay out expenses during administration with some income left over.