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Level 5
January 29, 2022
Question

Decedent estate and Charity

  • January 29, 2022
  • 1 reply
  • 19 views

Estate (1041) return.  Initial and Final return.  Clients sells home in her estate and will states net proceeds from the sale be disposed of as follows. 

"Devise and Bequeath the sum of $30,000 to name of Charity.  .   All the rest, residue, and remainder to be divided equally between her children.   Gain on the sale of the house is $ 49,095.00, less legal and other expenses, bring adjusted income to $29,477.   

Is this $30,000 a charitable contribution for 1041 purposes. ( line 13 of 1041)  - limited to $29,477?     

If it is , will it reduce the gain on the sale of the home that gets distributed to the beneficiaries?  When I put it in the 1041 module, it does  show up on line 13, but does not reduce the gain reported to the beneficiaries on the K-1.   I just want to make sure I am not doing something wrong.  

Publication 526 states an estate can take a charitable contribution if it is instructed thru the will, but I am not sure if the way its worded in the will is correct.   

Or does it matter since this is the final return and all income goes to the beneficiaries?   

Thank you for all your help.  

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1 reply

sjrcpa
Level 15
January 29, 2022

No. This is a specific bequest. It comes out of the principal, and the gain on the house is principal.

The more I know the more I don’t know.
jlew1229Author
Level 5
January 31, 2022

so not a charitable contribution?  

Sale price 975K  - basis 875K - closing cost $ 50K= Gain 50K  

Will states, 95K  to various relatives,   $150K to 3 charities, and the remainder to her 2 children.  

I had set up only the 2 children as beneficiaries, should I be setting up all of these people/charities as beneficiaries?      

sjrcpa
Level 15
January 31, 2022

Not a charitable contribution.

The 95K is also specific bequest so no K-1s for those people either.

Only the 2 children who get the remainder get K-1s.

The more I know the more I don’t know.