estate's responsibility for out-of-state K-1's?

The estate is required to supply K-1s based on where the estate is either located or has conducted business. Since the estate is in NY, and since you've said nothing to indicate that any business was conducted anywhere other than NY, a NY K-1 is all that is due.

Now, some of the beneficiaries MAY have to file NY tax returns to accout for their share of NY income and pay any NY taxes that may be due, but that is something they do on their end, not on the estate's end.

Most beneficiaries won't like this, primarily because they won't understand it, but think of it this way - for all practical purposes each beneficiary now has some financial activity from NY (simple as that).

Good luck, Gene E. Utterback, EA, RFC, ABA

As you say, all activity is in NY. So, everyone has to file a NY return (resident or non-resident, as the case may be). No issue there.

My greater concern is with the MA state returns that MA beneficiaries will have to file. These need to include the estate distribution. The fed K-1 documents this, but doesn't itemize the USG (T-bill) interest ... which would be exempt from MA tax. The NY K-1 doesn't itemize it either: it just provides a computed "adjustment" to your NY income.

Obviously, I can provide the correct amount. But, it wouldn't be in any 'official' form (ie, a K-1). Further, the actual MA K-1 form (2K-1, IIRC) has a column for "MA adjustments". In NY's case, eliminating the USG interest causes a proportionate decrease in the estate's (IT-205) allowed deductions. Who can say what MA might do?

Or not. As I said, it seems like a considerable burden on the estate, if it has to provide state-of-residence K-1's for out-of-state beneficiaries. But, it would be a probably more unreasonable burden to leave it to the casual beneficiary to deal with.

Or not not. It's the casual beneficiaries who've made the decisions to live in these "out of it" states, whose incompatible (and thus badly designed and ill chosen) tax laws are primarily responsible for creating these unreasonable burdens.

OK, perhaps I missed something in the OP - I've been known to do that from time to time.

For the sake of clarity, I'll outline any other assumptions I may make.

There is NO REQUIREMENT for the estate to produce a MA K-1.

There IS a requirement for the estate to produce a Federal K-1 with sufficient information so that the beneficiaries can file complete and accurate tax returns. This would include disclosure of the various TYPES of income that is passing through.

With no malice towards you personally (here comes an assumption) it sounds like either you are NOT a tax professional or are a tax pro who does not do much pass-through work. If either of these apply to you I strongly urge you to run - do NOT walk - to a tax pro who does pass-through work. That is going to be the ONLY way you'll know the returns are prepared correctly. The K-1s should include supplement information that properly and accurately discloses the TYPES of income, deductions and credits that pass through -that is the ONLY way the recipients can prepare their returns correctly.

This forum is NOT the place to learn taxation of any kind, especially pass through taxation. It IS a great place to get some basic guidance and clarity on how a particular issue is dealt with and it provides a wonderful area for the exchange of information - BUT it is NOT a substitute for a qualified professional.

Good luck, Gene E. Utterback, EA, RFC, ABA

I hadn't looked at this as I don't have much experience with Estate K-1s. That being said, now that I have looked.. I don't understand it.

MA requires a resident individual to report income from an estate. It gets reported on Line 7. The individual completes Schedule E-3. The data for the E-3 comes from the Federal K-1.

I see no requirement from the State of MA for any entity from another state of the union to provide a unique MA K-1 for its residents.

I looked at five other states here in the western USA and I find no requirement for individual state K-1s from out of state estates.

Thanks for the reply. That does answer the question. Again, thank you.

Since it appears that people may be a little put out over this question, I offer this explanation below. I apologize for any undue effort (or discomfort) it may have caused.

The question arose because I didn't see where USG interest would be reported to non-NY beneficiaries. It is not split out on the 1041 K-1. I do not see provision for it on the MA E-3. It IS accounted for on the NY K-1 (though not listed separately). So, I thought it might belong on the MA 2K-1. But, as you say, this is not the case.