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Total Pension distribution Code 4

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Level 2

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

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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.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.

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Level 15

Who was the check made out to?

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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Level 2

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

 

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Level 2

The estate

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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.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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Level 2

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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Level 15

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

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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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
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Level 2

Form 1041

 

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Level 2

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

 

 

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Highlighted
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.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.

View solution in original post

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Level 2

Thank you.

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Level 15

You betcha!

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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