How are in-kind distributions from an estate reported on a 1041?
Client is the executor of a decedent's estate. There is a sizable brokerage account held in decedent's name, which became part of the estate. Had executor sold the securities in that account, there would be gain or loss based on the sale price and the date of death value. But what if beneficiary creates his own brokerage account, and executor requests the securities themselves be distributed in-kind to the beneficiary's own brokerage account? There is no realization with no sale, correct? And when the beneficiary goes to sell the securities in the future, he will calculate gain based on the date of death value rather than the value at the time the in-kind distribution occurs?
Asked differently, does the tax preparer ignore in-kind distributions on the 1041, reporting only interest, dividends, etc. paid to the estate? Thank you!
