I am not a lawyer or an accountant, and it has been several years since I've done a Form 1041 (Trusts and Estates Fiduciary Income Tax Return), so my memory is dim.
But, to give you a reply, since time is short (especially if the executor wants to run things by a real professional)...
You are basically correct, although there are potential factors that might make it not exactly like you say, such as:
But, to give you a reply, since time is short (especially if the executor wants to run things by a real professional)...
You are basically correct, although there are potential factors that might make it not exactly like you say, such as:
- The estate has considerable expenses of the sort that can be deducted on Form 1041, so that - if the income were retained in the estate - the amount taxed would be less than the full $75K.
(I don't recall what happens on the Form 1041 Schedule K-1 (that the heirs would receive) if there are considerable deductible estate expenses, but you distributed all the income. The deductible estate expenses might or might not go unused. I don't remember.) - The estate is reporting on fiscal year rather than a calendar year, so that 12/31/2024 might not be your deadline
- Not all of the $75K would be taxed at 37%, but most of it would. E.g., the 1041 Instructions for 2023 show the 37% rate on ordinary income kicking in at only $14,450 of ordinary taxable income. (I'm using the 2023 version because the instructions for 2024 aren't out yet. The 2024 number will be adjusted upwards by the inflation adjustment.) However, NIIT kicks in at that point too, which would take the marginal rate up to 40.8% (federal). (See pages 31 and 36 of the (2023) Instructions for Form 1041).
Statistics: Posted by cas — Sun Nov 24, 2024 7:44 am — Replies 1 — Views 77