I have an estate that cashed in substantial US Bond interest. I am trying to determine if I should amend the decedents final return (2006) and include the interst on the final 1040 or include on the
1041.
No income has been distributed to the beneficiaries at this point (new client). I am doing a 12/31/07 Form 1041. Can I report the income (interest) on a K-1 if the income remains in the trust? Is it too late to distribute and report on K1? Note that the K1 approach would result in the lowest tax.
If the only option is that it would be taxed at the estate level (which I suspect) what penalty/interest charges can I expect on the
2006 Form 1040X. I have only run into interst charges on prior amended returns I've done. This is a large one so I don't want a surprise FTP or FTF penalty.
Thank You.