1041 Estate K-1 Question

Forum|Forum|2 years ago
March 30, 2024
2 replies
16 views

I want to preface that I don't usually dabble with 1041s so this is new to me. I have a client who bought out a cottage from his deceased mother's estate (his 9 sibling also had a shar of it that he bought out). I was under the impression that this would trigger K-1s for all the siblings but the software is computing any. Instead, it is having the estate pay taxes on the capital gains. I guess my question is, is this correct? Am I doing something wrong? If the estate is paying the taxes, would the siblings not get a K-1 from any money distributed after the sale?

Any help is appreciated. I typically just stick with 1040s but thought I had a decent understanding of this. So if I'm wrong, I'd like to know where I went wrong.

Thanks y'all

ProSeries Professional

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BobKamman

Level 15

It depends on local (state) law but usually capital gains are taxed to the trust or estate; only "other income" flows through to the beneficiaries. Unless it's the 1041 final return. Is it? Have you marked it as Final?

W

Wonderboy1836 Author

Level 2

Hi Bob, thanks for your response. I did not check off Final Return, after doing so still no K-1s popping up for any of the kids. So again, I'm convinced I'm doing something wrong here. Unless I suppose the K-1s won't automatically populate and I have to do it?