There are two form 1099-R's received, one with code 4D the other with code 4 and the IRA box checked. Both forms have a figure in box 1 and box 2a and both are total distributions. The only expenses in the year of receiving the distributions are expenses from rental properties. The rental properties were transferred to the named beneficiaries before the year ended, does that need reported on form 1041? None of the 1099-R income was distributed until the following year. I don't do a lot with estates and this return is showing a large amount due for federal income tax. If anyone has any expertise and willing to help I would greatly appreciate it, thank you.
What was the date of death? Were the disributions made before or after that date? Do the 1099R's have the decedent SSN or the estate EIN? Were the beneficiaries named in a will or a trust? Is there a probate? Did the testamentary document (will or trust) give designated properties to designated beneficiaries, or were they just divided up according to some percentage formula? What happened to the decedent's cash?
The date of death was May 2022. The distributions were made after death and the 1099’s are issued in the estates EIN. The beneficiaries were named in the Will with the properties designated per beneficiary. I’m not sure about probate, but I don’t think so. The decedents cash was transferred to the estate on death.
If you don't do much estate work, this is not one to learn on. If there is a will and some of the estate has already been administered, there is a probate. Who is your client, anyway? The executor/personal representative? Does that person have a lawyer? Does the lawyer have someone for referrals to do estate tax work? I hope so.
Doesn't really matter when it was distributed (or does it, if trying to match expenses with income?) but there's about a week left to file the first return, or at least an extension. Which is why finding an expert is critical.
If it was distributed by April 30, and you use that year end, the estate can get an income distribution deduction. Tax will be paid by the beneficiaries on their 2023 returns at presumably lower rates.
Thank you, Bob, for your input. We have contacted an expert in estate income tax to complete this tax return for the personal representative. I appreciate your feedback!
Thank you sjrcpa for your input. After speaking to an expert, they will be using a fiscal year so as to make use of the income distibution deductions that didn't occur until April of this year. I appreciate you feedback!
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