BobKamman
Level 15

Taxable income to beneficiary shouldn't be more than amount actually distributed to him.  If the 1099-R was for $50,000 and the creditors got $20,000, the beneficiary should have received $30,000 and should pay tax on it.  The estate may have $20,000 taxable income and should have set aside enough money to pay that tax before making final distribution.