"J. Wasileski" <j.wasileski[at]mindspring.com> wrote

- quote -

If you did not file a 1041 for the last part of 2003 (and I
would not have under the circumstances you indicate), you
could file a "first and final" Form 1041 for the period from
date of death to May 31, 2004 (the longest fiscal year you
could choose). While there does not have appear to be much
income, I would assume the probate fees and other expenses
of administration are large enough that each beneficiary
would have "excess deductions on termination" that would be
reported on their K-1 and could then be claimed on their
income tax return.

Vida Freeman, EA

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"J. Wasileski" <j.wasileski[at]mindspring.com> wrote:

- quote -

My first advice would be to hire someone skilled in
preparing 1041s. Furthermore, excess deductions on
termination of an estate pass through on the K-1 to the
beneficiaries. Finally, cash distribution is not reported on
the K-1.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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I'm an executor for a small estate (< 75K). Following the
decedent's death in June of 2003, all checking/savings/money
market accounts were closed and combined into a non-interest
bearing business checking account in the name of the estate.
There was no other income from employment, business, real
estate, etc.

I filed a final 1040 for the decedent for tax year 2003 and
included the percentage of income received up to the date of
death (which was just interest and dividends on bank
accounts, bonds, annuities).

The estate's portion of income for the remainder of the 2003
calendar year is < $300.

The proceeds of the estate were to be divided among 3
beneficiaries. Two of the 3 received their final
distributions in 2004. The third beneficiary's whereabouts
are unknown, so 1/3 of the estate remains.

Questions:

1. Do I need to file a final 1041 for the estate since the
estate's income is less than the $600 gross income
exemption? Probate legal fees were more than total income,
so taxable income is a negative value.

2. Do I need to send a schedule K-1 to each beneficiary for
cash distributions from the estate? No 'income' is being
transferred to the beneficiaries, so there should be no tax
liability on the amounts distributed, correct?

3. If I do need to file a schedule K-1, where do I report a
cash distribution on the form? Having a hard time finding
where I would enter this.

4. What about the beneficiary I cannot contact? I don't
have the SSN to file a schedule K-1 and have no idea when
the money will actually be distributed.

Any advice would be greatly appreciated.

thanks,

-J-

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