1041 and k-1's

[WITAXLADY]

so I am thinking some more - hey - I am still doing 2017's and 13', - 17's here!! glad it is Nov but..

So the estate pays this $36,000 in tax and then the beneficiaries still get K-1's?

If the estate pays all the tax - why would I need to do k-1"s

wouldn't the cash just get split up and call it done?

Thx D

[WITAXLADY]

ok - I am thinking I need help from someone familiar with the 1041 - I would pay for that help - and pdf the info please - if I give all the income so to speak - so there is not any tax - and the benes are taxed - I get it now... doing distributions brings up the taxable income! and then I need more money - not available anymore as I gave it away so as not to  pay the tax 

ie - $86,000 left in bank - distribute $86,000 - Sch B recalculates to $92,000 for taxable income of $6,000 and $1,200 of tax...

What am I missing?

Thank you,

D

[DANRVAN]

Really need more info to provide an answer.  Basically "income" distributed to ben's is not taxable on 1041.

[WITAXLADY]

I know - when the income is distributed - it really knocks down the 1041 tax - so lets distribute all the income

$88,000 - 88,000 =0 right!! but the 1041 then shows (2,000 income and still part is taxable - and there was only 88,000 of income... cannot figure out why more!!

[SaraEA]

I'm trying to understand this, so correct me if I'm wrong.  The estate had $88k income and paid $36k tax.  It did not distribute any income but paid the tax itself.  The 1041 should show the $88k as taxable income and 0 income distribution deduction, which then leads to the tax bill of $36k.  The following fiscal year the estate has no income and just distributes principal, no income distribution deduction (because there was no income) and nothing to report on the 1041 or K1s. Are you confusing income with distributions?  The 1041 is an INCOME tax form.  Try using a closing date for the estate on the date the income tax was paid.  After that date there should be no income and thus no 1041 requirement. 

Why on earth did the executor choose for the estate to pay that obscene tax rate instead of distributing the income to the beneficiaries?  Unless they were all in the 39.6 bracket?

[Abby Normal]

19 hours ago, WITAXLADY said:

cannot figure out why more!! 

Capital gain income is not automatically distributed so the estate pays the tax on that. Main exception is final return, when everything passes out.