I'm filling out the Form 1041 which is the first and last Estate Income Tax return for someone who died in 2007. All monies have been distributed.
The estate will be taking all the income-- not allocating any to the beneficiaries. So do I still need to submit Form K-1 with it?
Maybe, I would prep and send one even if it had all zeros on it.
BUT I must ask, exactly what do you mean by "the estate will be taking all the income"? Does this mean that the estate will be paying all the tax on the income? If so, you should be aware that estates generally pay tax at the highest individual rates once a minimal level of income is reached. So having the estate pay the tax could cost much more than passing the income through to the beneficiaries.
Gene E. Utterback, EA, RFC, ABA
Well that's what I was thinking of doing-- figuring the estate (and the beneficiaries) would be more likely to stay "under the radar" and not get an extra hard look, much less an audit.
The amount of the estate's net income for 2008 was about $45,000 with 40,000 of this from the gain on an annuity.
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