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Total Pension distribution Code 4

LINDAAHILL
Level 3

Can this distribution be transferred to an heir without paying the 40% estate tax?

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IRonMaN
Level 15

If the estate pays the tax for 2019 and the estate eventually gets closed and distributed in 2020, there wouldn't be any additional tax owed by the beneficiary ------------------- assuming there aren't any additional tax generating issues out there.


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12 Comments 12
IRonMaN
Level 15

Who was the check made out to?


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LINDAAHILL
Level 3

The 1099 was issued to the estate and direct deposited in the Estate bank account.

 

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LINDAAHILL
Level 3

The estate

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IRonMaN
Level 15

Did the estate hold on to the money or did it distribute the money to the beneficiaries?  If it did distribute the money, a K-1 would get generated from the 1041 and the income would flow to the beneficiary.


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LINDAAHILL
Level 3

It has not been distributed.  But income tax was withheld.  Is it necessary to pay Estate tax at 40%  on amount of K1?  

 

THANK YOU SO MUCH FOR THE HELP

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IRonMaN
Level 15

If it wasn't distributed it would be taxed at the fiduciary income tax rates.


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sjrcpa
Level 15

If it didn't get distributed it's not on the K-1.

40% seems high, but entirely possible (income tax + NIIT). Are you talking 1041 or 706?


Ex-AllStar
LINDAAHILL
Level 3

Form 1041

 

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LINDAAHILL
Level 3

Since the beneficiary would be inheriting the money, I assume no tax would be paid.  Is that correct?

 

 

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IRonMaN
Level 15

If the estate pays the tax for 2019 and the estate eventually gets closed and distributed in 2020, there wouldn't be any additional tax owed by the beneficiary ------------------- assuming there aren't any additional tax generating issues out there.


Ukraine - hang in there
LINDAAHILL
Level 3

Thank you.

IRonMaN
Level 15

You betcha!


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