HELP re a 1041 Estate taxes being taxed twice

Forum|Forum|1 year ago
July 7, 2025
4 replies
11 views

Please help, I am trying to understand why this income I am putting on a 1041 seems to be ...being taxed twice.. once by the estate and again by the k1 receivers! A relative died...so the family sold his home and have a gain of 45000. they they also received a 1099R ending his retirement for 9800. Putting the profit from the sale on the long term gain.... and the 1099R under other income.. there is a big tax load for roughly 11000. when dividing it on 4 k1's.. they are being taxed again on the 25% of the sales.. I put the difference of the sale on the form the 8949 form and could only find a line for the 1099R on line 8. PLEASE TELL me if I am doing this right... OR should I do it with out K1's? I sincerely appreciate any and all advice and HELP.. I am new at doing new estates.. Thank you for your time and consideration in this important matter.

ProSeries Professional

sjrcpa

Level 15

Did money get distributed? Is this a final 1041?

The income should not be taxed twice.

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

shf1957Author

Level 6

they were not advised what to do.. so when they sold it.. they split the amount by 4 members. ( never thought about taxes for the estate). One for sure won't help out to pay any of the taxes...so was hoping we could just file the 1041 and get a total and pay it that way. The other 3 said there was enough in the bank to just cover what that looked like for a total in taxes if it was paid through the estate.. There is no other income just the 1099R amount which could cover the taxes.

BobKamman

Level 15

How can you have a gain on the sale of a decedent's home? Did they take a couple years to sell it, in a rising market? What did you use for cost basis, FMV at date of death, and selling expenses?

shf1957Author

Level 6

They used the 100 percent assessment value since it's never been appraised and they have no ideah of his cost and improvements over the years. They lived states away and were his only living relatives. They sold it for 425,000, it was assessed for 329,500 and after attorney, real estate fees .. they only came out with 374,670. He owned it for over 25 yrs.. primary home... they sold it with in 3 months... to just unload it.

BobKamman

Level 15

If it sold three months after death, I would use the selling price as FMV. Either that or make sure my malpractice insurance covered gross negligence. It doesn't matter that they have no idea of cost and improvements over the years, because those are irrelevant.

Accountant-Man

Level 13

Regardless of the rest of this discussion: in order to get ordinary income and capital gain income(if any) to be passed through to beneficiaries, you must make monetary distributions amounts on each k-1 AND you must make entries on Sch D after the long term section to show how much money is distributed to beneficiaries.

For capital losses to be passed through, the 1041 must be marked "Final" on Page 1.

** I'm still a champion... of the world! Even without The Lounge.

qbteachmt

Level 15

"so the family sold his home and have a gain of 45000"

"primary home... they sold it with in 3 months... to just unload it."

That has established the value, then. There is no gain and no need for an assessment or appraisal. Assessor rates are typically under market. Appraisals to establish FMV are moot, as long as it wasn't sold at some huge discount to a family member. If it was sold on the open market, that's its value by definition and that's why there is no concern as to original basis, improvements, gain or loss. The only expenses were the sale costs. There is no taxable gain for anyone to split.

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