Publication 559 |
2000 Tax Year |
Distributions to Beneficiaries From an Estate
If you are the beneficiary of an estate that must distribute all
its income currently, you must report your share of the distributable
net income whether or not you have actually received it.
If you are the beneficiary of an estate that does not have to
distribute all its income currently, you must report all income that
must be distributed to you (whether or not actually distributed) plus
all other amounts paid, credited, or required to be distributed to
you, up to your share of distributable net income. As explained
earlier in Distributions Deduction under Income Tax
Return of an Estate- Form 1041, for an amount to be
currently distributable income, there must be a specific requirement
for current distribution either under local law or by the terms of the
decedent's will. If there is no such requirement, the income is
reportable only when distributed.
If the estate has more than one beneficiary, the separate shares
rule discussed earlier under Distributions Deduction may
have to be used to determine the distributable net income allocable to
each beneficiary. The beneficiaries in the examples shown in this
discussion do not meet the requirements of the separate shares rule.
Income That Must Be
Distributed Currently
Beneficiaries who are entitled to receive currently distributable
income generally must include in gross income the entire amount due
them. However, if the currently distributable income is more than the
estate's distributable net income figured without deducting charitable
contributions, each beneficiary must include in gross income a ratable
part of the distributable net income.
Example.
Under the terms of the will of Gerald Peters, $5,000 a year is to
be paid to his widow and $2,500 a year is to be paid to his daughter
out of the estate's income during the period of administration. There
are no charitable contributions. For the year, the estate's
distributable net income is only $6,000. Since the distributable net
income is less than the currently distributable income, the widow must
include in her gross income only $4,000 [($5,000 x $7,500)
x $6,000], and the daughter must include in her gross
income only $2,000 [($2,500 x $7,500) x
$6,000].
Annuity payable out of income or corpus.
Income that must be distributed currently includes any amount that
must be paid out of income or corpus (principal of the estate) to the
extent the amount is satisfied out of income for the tax year. An
annuity that must be paid in all events (either out of income or
corpus) would qualify as income that must be distributed currently to
the extent there is income of the estate not paid, credited, or
required to be distributed to other beneficiaries for the tax year.
Example 1.
Henry Frank's will provides that $500 be paid to the local
Community Chest out of the income each year. It also provides that
$2,000 a year is currently distributable out of income to his brother,
Fred, and an annuity of $3,000 is to be paid to his sister, Sharon,
out of income or corpus. Capital gains are allocable to corpus, but
all expenses are to be charged against income. Last year, the estate
had income of $6,000 and expenses of $3,000. The personal
representative paid the $500 to the Community Chest and made the
distributions to Fred and Sharon as required by the will.
The estate's distributable net income (figured before the
charitable contribution) is $3,000. The currently distributable income
totals $2,500 ($2,000 to Fred and $500 to Sharon). The income
available for Sharon's annuity is only $500 because the will requires
that the charitable contribution be paid out of current income.
Because the $2,500 treated as distributed currently is less than the
$3,000 distributable net income (before the contribution), Fred must
include $2,000 in his gross income, and Sharon must include $500 in
her gross income.
Example 2.
Assume the same facts as in Example 1 except that the
estate has an additional $1,000 of administration expenses,
commissions, etc., that are chargeable to corpus. The estate's
distributable net income (figured before the charitable contribution)
is now $2,000 ($3,000 - $1,000 additional expense). The amount
treated as currently distributable income is still $2,500 ($2,000 to
Fred and $500 to Sharon). Because the $2,500, treated as distributed
currently, is more than the $2,000 distributable net income, Fred has
to include only $1,600 [($2,000 x $2,500) x
$2,000] in his gross income and Sharon has to include only $400
[($500 x $2,500) x $2,000] in her gross income.
Because Fred and Sharon are beneficiaries of amounts that must be
distributed currently, they do not benefit from the reduction of
distributable net income by the charitable contribution deduction.
Other Amounts
Distributed
Any other amount paid, credited, or required to be distributed to
the beneficiary for the tax year also must be included in the
beneficiary's gross income. Such an amount is in addition to those
amounts that must be distributed currently, as discussed earlier. It
does not include gifts or bequests of specific sums of money or
specific property if such sums are paid in three or fewer
installments. However, amounts that can be paid only out of income are
not excluded under this rule. If the sum of the income that must be
distributed currently and other amounts paid, credited, or required to
be distributed exceeds distributable net income, these other amounts
are included in the beneficiary's gross income only to the extent
distributable net income exceeds the income that must be distributed
currently. If there is more than one beneficiary, each will include in
gross income only a pro rata share of such amounts.
The personal representative can elect to treat distributions paid
or credited by the estate within 65 days after the close of the
estate's tax year as having been paid or credited on the last day of
that tax year.
The following are examples of other amounts distributed.
- Distributions made at the discretion of the personal
representative.
- Distributions required by the terms of the will upon the
happening of a specific event.
- Annuities that must be paid in any event, but only out of
corpus (principal).
- Distributions of property in kind as defined earlier in
Distributions Deduction under Income Tax Return of an
Estate- Form 1041.
- Distributions required for the support of the decedent's
surviving spouse or other dependent for a limited period, but only out
of corpus (principal).
If an estate distributes property in kind, the amount of the
distribution ordinarily is the lesser of the estate's basis in the
property or the property's fair market value when distributed.
However, the amount of the distribution is the property's fair market
value if the estate recognizes gain on the distribution. See Gain
or loss on distributions in kind in the discussion Income
To Include under Income Tax Return of an Estate-Form
1041, earlier.
Example.
The terms of Michael Scott's will require the distribution of
$2,500 of income annually to his wife, Susan. If any income remains,
it may be accumulated or distributed to his two children, Joe and
Alice, in amounts at the discretion of the personal representative.
The personal representative also may invade the corpus (principal) for
the benefit of Scott's wife and children.
Last year, the estate had income of $6,000 after deduction of all
expenses. Its distributable net income is also $6,000. The personal
representative distributed the required $2,500 of income to Susan. In
addition, the personal representative distributed $1,500 each to Joe
and Alice and an additional $2,000 to Susan.
Susan includes in her gross income the $2,500 of currently
distributable income. The other amounts distributed totaled $5,000
($1,500 + $1,500 + $2,000) and are includible in the income of Susan,
Joe, and Alice to the extent of $3,500 (distributable net income of
$6,000 minus currently distributable income to Susan of $2,500). Susan
will include an additional $1,400 [($2,000 x $5,000)
x $3,500] in her gross income. Joe and Alice each will
include $1,050 [($1,500 x $5,000) x $3,500] in
their gross incomes.
Discharge of a
Legal Obligation
If an estate, under the terms of a will, discharges a legal
obligation of a beneficiary, the discharge is included in that
beneficiary's income as either currently distributable income or other
amount paid. This does not apply to the discharge of a beneficiary's
obligation to pay alimony or separate maintenance.
The beneficiary's legal obligations include a legal obligation of
support, for example, of a minor child. Local law determines a legal
obligation of support.
Character of Distributions
An amount distributed to a beneficiary for inclusion in gross
income retains the same character for the beneficiary that it had for
the estate.
No charitable contribution made.
If no charitable contribution is made during the tax year, you must
treat the distributions as consisting of the same proportion of each
class of items entering into the computation of distributable net
income as the total of each class bears to the total distributable net
income. Distributable net income was defined earlier in
Distributions Deduction under Income Tax Return of an
Estate- Form 1041. However, if the will or local law
specifically provides or requires a different allocation, you must use
that allocation.
Example 1.
An estate has distributable net income of $3,000, consisting of
$1,800 in rents and $1,200 in taxable interest. There is no provision
in the will or local law for the allocation of income. The personal
representative distributes $1,500 each to Jim and Ted, beneficiaries
under their father's will. Each will be treated as having received
$900 in rents and $600 of taxable interest.
Example 2.
Assume in Example 1 that the will provides for the payment of the
taxable interest to Jim and the rental income to Ted and that the
personal representative distributed the income under those provisions.
Jim is treated as having received $1,200 in taxable interest and Ted
is treated as having received $1,800 of rental income.
Charitable contribution made.
If a charitable contribution is made by an estate and the terms of
the will or local law provide for the contribution to be paid from
specified sources, that provision governs. If no provision or
requirement exists, the charitable contribution deduction must be
allocated among the classes of income entering into the computation of
the income of the estate before allocation of other deductions among
the items of distributable net income. In allocating items of income
and deductions to beneficiaries to whom income must be distributed
currently, the charitable contribution deduction is not taken into
account to the extent that it exceeds income for the year reduced by
currently distributable income.
Example.
The will of Harry Thomas requires a current distribution out of
income of $3,000 a year to his wife, Betty, during the administration
of the estate. The will also provides that the personal
representative, using discretion, may distribute the balance of the
current earnings either to Harry's son, Tim, or to one or more of
certain designated charities. Last year, the estate's income consisted
of $4,000 of taxable interest and $1,000 of tax-exempt interest. There
were no deductible expenses. The personal representative distributed
the $3,000 to Betty, made a contribution of $2,500 to the local heart
association, and paid $1,500 to Tim.
The distributable net income for determining the character of the
distribution to Betty is $3,000. The charitable contribution deduction
to be taken into account for this computation is $2,000 (the estate's
income ($5,000) minus the currently distributable income ($3,000)).
The $2,000 charitable contribution deduction must be allocated: $1,600
[($4,000 x $5,000) x $2,000] to taxable
interest and $400 [($1,000 x $5,000) x $2,000]
to tax-exempt interest. Betty is considered to have received $2,400
($4,000 - $1,600) of taxable interest and $600 ($1,000 -
$400) of tax-exempt interest. She must include the $2,400 in her gross
income. She must report the $600 of tax-exempt interest, but it is not
taxable.
To determine the amount to be included in Tim's gross income,
however, take into account the entire charitable contribution
deduction. Since the currently distributable income is greater than
the estate's income after taking into account the charitable
contribution deduction, none of the amount paid to Tim must be
included in his gross income for the year.
How and When To Report
How you report your income from the estate depends on the character
of the income in the hands of the estate. When you report the income
depends on whether it represents amounts credited or required to be
distributed to you or other amounts.
How to report estate income.
Each item of income keeps the same character in your hands as it
had in the hands of the estate. If the items of income distributed or
considered to be distributed to you include dividends, tax-exempt
interest, or capital gains, they will keep the same character in your
hands for purposes of the tax treatment given those items. Generally,
you report the dividends on line 9 of your Form 1040, and the capital
gains on your Schedule D (Form 1040). The tax-exempt interest, while
not included in taxable income, must be shown on line 8b of your Form
1040. Report business and other nonpassive income in Part III of your
Schedule E (Form 1040).
The estate's personal representative should provide you with the
classification of the various items that make up your share of the
estate income and the credits you should take into consideration so
that you can properly prepare your individual income tax return. See
Schedule K-1 (Form 1041), later.
When to report estate income.
If income from the estate is credited or must be distributed to you
for a tax year, report that income (even if not distributed) on your
return for that year. The personal representative can elect to treat
distributions paid or credited within 65 days after the close of the
estate's tax year as having been paid or credited on the last day of
that tax year. If this election is made, you must report that
distribution on your return for that year.
Report other income from the estate on your return for the year in
which you receive it. If your tax year is different from the estate's
tax year, see Different tax years, next.
Different tax years.
You must include your share of the estate income in your return for
your tax year in which the last day of the estate's tax year falls. If
the tax year of the estate is the calendar year and your tax year is a
fiscal year ending on June 30, you will include in gross income for
the tax year ended June 30 your share of the estate's distributable
net income distributed or considered distributed during the calendar
year ending the previous December 31.
Death of individual beneficiary.
If an individual beneficiary dies, the beneficiary's share of the
estate's distributable net income may be distributed or be considered
distributed by the estate for its tax year that does not end with or
within the last tax year of the beneficiary. In this case, the estate
income that must be included in the gross income on the beneficiary's
final return is based on the amounts distributed or considered
distributed during the tax year of the estate in which his or her last
tax year ended. However, for a cash basis beneficiary, the gross
income of the last tax year includes only the amounts actually
distributed before death. Income that must be distributed to the
beneficiary but, in fact, is distributed to the beneficiary's estate
after death is included in the gross income of the beneficiary's
estate as income in respect of a decedent.
Termination of nonindividual beneficiary.
If a beneficiary that is not an individual, for example a trust or
a corporation, ceases to exist, the amount included in its gross
income for its last tax year is determined as if the beneficiary were
a deceased individual. However, income that must be distributed before
termination, but which is actually distributed to the beneficiary's
successor in interest, is included in the gross income of the
nonindividual beneficiary for its last tax year.
Schedule K-1 (Form 1041).
The personal representative for the estate must provide you with a
copy of Schedule K-1 (Form 1041) or a substitute Schedule
K-1. You should not file the form with your Form 1040, but
should keep it for your personal records.
Each beneficiary (or nominee of a beneficiary) who receives a
distribution from the estate for the tax year or to whom any item is
allocated must receive a Schedule K-1 or substitute. The
personal representative handling the estate must furnish the form to
each beneficiary or nominee by the date on which the Form 1041 is
filed.
Nominees.
A person who holds an interest in an estate as a nominee for a
beneficiary must provide the estate with the name and address of the
beneficiary, and any other required information. The nominee must
provide the beneficiary with the information received from the estate.
Penalty.
A personal representative (or nominee) who fails to provide the
correct information may be subject to a $50 penalty for each failure.
Consistent treatment of items.
You must treat estate items the same way on your individual return
as they are treated on the estate's income tax return. If your
treatment is different from the estate's treatment, you must file Form
8082, Notice of Inconsistent Treatment or Administrative
Adjustment Request (AAR), with your return to identify the
difference. If you do not file Form 8082 and the estate has filed a
return, the IRS can immediately assess and collect any tax and
penalties that result from adjusting the item to make it consistent
with the estate's treatment.
Special Rules
for Distributions
Some special rules apply for determining the deduction allowable to
the estate for distributions to beneficiaries and the amount
includible in the beneficiary's gross income.
Bequest
A bequest is the act of giving or leaving property to another
through the last will and testament. Generally, any distribution of
income (or property in kind) to a beneficiary is an allowable
deduction to the estate and is includible in the beneficiary's gross
income to the extent of the estate's distributable net income.
However, a distribution will not be an allowable deduction to the
estate and will not be includible in the beneficiary's gross income if
the distribution meets the following requirements.
- It is required by the terms of the will.
- It is a gift or bequest of a specific sum of money or
property.
- It is paid out in three or fewer installments under the
terms of the will.
Specific sum of money or property.
To meet this test, the amount of money or the identity of the
specific property must be determinable under the decedent's will as of
the date of death. To qualify as specific property, the property must
be identifiable both as to its kind and its amount.
Example 1.
Dave Rogers' will provided that his son, Ed, receive Dave's
interest in the Rogers-Jones partnership. Dave's daughter, Marie,
would receive a sum of money equal to the value of the partnership
interest given to Ed. The bequest to Ed is a gift of a specific
property ascertainable at the date of Dave Rogers' death. The bequest
of a specific sum of money to Marie is determinable on the same date.
Example 2.
Mike Jenkins' will provided that his widow, Helen, would receive
money or property to be selected by the personal representative equal
in value to half of his adjusted gross estate. The identity of the
property and the money in the bequest are dependent on the personal
representative's discretion and the payment of administration expenses
and other charges, which are not determinable at the date of Mike's
death. As a result, the provision is not a bequest of a specific sum
of money or of specific property, and any distribution under that
provision is a deduction for the estate and income to the beneficiary
(to the extent of the estate's distributable net income). The fact
that the bequest will be specific sometime before distribution is
immaterial. It is not ascertainable by the terms of the will as of the
date of death.
Distributions not treated as bequests.
The following distributions are not bequests that meet all the
requirements listed earlier that allow a distribution to be excluded
from the beneficiary's income and do not allow it as a deduction to
the estate.
Paid only from income.
An amount that can be paid only from current or prior income of the
estate does not qualify even if it is specific in amount and there is
no provision for installment payments.
Annuity.
An annuity or a payment of money or of specific property in lieu
of, or having the effect of, an annuity is not the payment of a
specific property or sum of money.
Residuary estate.
If the will provides for the payment of the balance or residue of
the estate to a beneficiary of the estate after all expenses and other
specific legacies or bequests, that residuary bequest is not a payment
of a specific property or sum of money.
Gifts made in installments.
Even if the gift or bequest is made in a lump sum or in three or
fewer installments, it will not qualify as a specific property or sum
of money if the will provides that the amount must be paid in more
than three installments.
Conditional bequests.
A bequest of a specific property or sum of money that may otherwise
be excluded from the beneficiary's gross income will not lose the
exclusion solely because the payment is subject to a condition.
Installment payments.
Certain rules apply in determining whether a bequest of specific
property or a sum of money has to be paid or credited to a beneficiary
in more than three installments.
Personal items.
Do not take into account bequests of articles for personal use,
such as personal and household effects and automobiles.
Real property.
Do not take into account specifically designated real property, the
title to which passes under local law directly to the beneficiary.
Other property.
All other bequests under the decedent's will for which no time of
payment or crediting is specified and that are to be paid or credited
in the ordinary course of administration of the estate are considered
as required to be paid or credited in a single installment. Also, all
bequests payable at any one specified time under the terms of the will
are treated as a single installment.
A testamentary trust.
In determining the number of installments that must be paid or
credited to a beneficiary, the decedent's estate and a testamentary
trust created by the decedent's will are treated as separate entities.
Amounts paid or credited by the estate and by the trust are counted
separately.
Denial of Double Deduction
A deduction cannot be claimed twice. If an amount is considered to
have been distributed to a beneficiary of an estate in a preceding tax
year, it cannot again be included in figuring the deduction for the
year of the actual distribution.
Example.
The will provides that the estate must distribute currently all of
its income to a beneficiary. For administrative convenience, the
personal representative did not make a distribution of a part of the
income for the tax year until the first month of the next tax year.
The amount must be deducted by the estate in the first tax year, and
must be included in the gross income of the beneficiary in that year.
This amount cannot be deducted again by the estate in the following
year when it is paid to the beneficiary, nor must the beneficiary
again include the amount in gross income in that year.
Charitable Contributions
The amount of a charitable contribution used as a deduction by the
estate in determining taxable income cannot be claimed again as a
deduction for a distribution to a beneficiary.
Termination of Estate
The termination of an estate generally is marked by the end of the
period of administration and by the distribution of the assets to the
beneficiaries under the terms of the will or under the laws of
succession of the state if there is no will. These beneficiaries may
or may not be the same persons as the beneficiaries of the estate's
income.
Period of Administration
The period of administration is the time actually required by the
personal representative to assemble all of the decedent's assets, pay
all the expenses and obligations, and distribute the assets to the
beneficiaries. This may be longer or shorter than the time provided by
local law for the administration of estates.
Ends if all assets distributed.
If all assets are distributed except for a reasonable amount set
aside, in good faith, for the payment of unascertained or contingent
liabilities and expenses (but not including a claim by a beneficiary,
as a beneficiary) the estate will be considered terminated.
Ends if period unreasonably long.
If settlement is prolonged unreasonably, the estate will be treated
as terminated for federal income tax purposes. From that point on, the
gross income, deductions, and credits of the estate are considered
those of the person or persons succeeding to the property of the
estate.
Transfer of Unused
Deductions to Beneficiaries
If the estate has unused loss carryovers or excess deductions for
its last tax year, they are allowed to those beneficiaries who succeed
to the estate's property. See Successor beneficiary, later.
Unused loss carryovers.
An unused net operating loss carryover or capital loss carryover
existing upon termination of the estate is allowed to the
beneficiaries succeeding to the property of the estate. That is, these
deductions will be claimed on the beneficiary's tax return. This
treatment occurs only if a carryover would have been allowed to the
estate in a later tax year if the estate had not been terminated.
Both types of carryovers generally keep their same character for
the beneficiary as they had for the estate. However, if the
beneficiary of a capital loss carryover is a corporation, the
corporation will treat the carryover as a short-term capital loss
regardless of its status in the estate. The net operating loss
carryover and the capital loss carryover are used in figuring the
beneficiary's adjusted gross income and taxable income. The
beneficiary may have to adjust any net operating loss carryover in
figuring the alternative minimum tax.
The first tax year to which the loss is carried is the
beneficiary's tax year in which the estate terminates. If the loss can
be carried to more than one tax year, the estate's last tax year
(whether or not a short tax year) and the beneficiary's first tax year
to which the loss is carried each constitute a tax year for figuring
the number of years to which a loss may be carried. A capital loss
carryover from an estate to a corporate beneficiary will be treated as
though it resulted from a loss incurred in the estate's last tax year
(whether or not a short tax year), regardless of when the estate
actually incurred the loss.
If the last tax year of the estate is the last tax year to which a
net operating loss may be carried, see No double deductions,
later. For a general discussion of net operating losses, see
Publication 536.
For a discussion of capital losses and capital loss
carryovers, see Publication 550.
Excess deductions.
If the deductions in the estate's last tax year (other than
deductions for personal exemptions and charitable contributions) are
more than gross income for that year, the beneficiaries succeeding to
the estate's property can claim the excess as a deduction in figuring
taxable income. To establish these deductions, a return must be filed
for the estate along with a schedule showing the computation of each
kind of deduction and the allocation of each to the beneficiaries.
An individual beneficiary must itemize deductions to claim these
excess deductions. The deduction is claimed on Schedule A (Form 1040),
subject to the 2% limit on miscellaneous itemized deductions. The
beneficiaries can claim the deduction only for the tax year in which
or with which the estate terminates, whether the year of termination
is a normal year or a short tax year.
No double deductions.
A net operating loss deduction allowable to a successor beneficiary
cannot be considered in figuring the excess deductions on termination.
However, if the estate's last tax year is the last year in which a
deduction for a net operating loss can be taken, the deduction, to the
extent not absorbed in the last return of the estate, is treated as an
excess deduction on termination. Any item of income or deduction, or
any part thereof, that is taken into account in figuring a net
operating loss or a capital loss carryover of the estate for its last
tax year cannot be used again to figure the excess deduction on
termination.
Successor beneficiary.
A beneficiary entitled to an unused loss carryover or an excess
deduction is the beneficiary who, upon the estate's termination, bears
the burden of any loss for which a carryover is allowed or of any
deductions more than gross income.
If decedent had no will.
If the decedent had no will, the beneficiaries are those heirs or
next of kin to whom the estate is distributed. If the estate is
insolvent, the beneficiaries are those to whom the estate would have
been distributed had it not been insolvent. If the decedent's spouse
is entitled to a specified dollar amount of property before any
distributions to other heirs and the estate is less than that amount,
the spouse is the beneficiary to the extent of the deficiency.
If decedent had a will.
If the decedent had a will, a beneficiary normally means the
residuary beneficiaries (including residuary trusts). Those
beneficiaries who receive a specific property or a specific amount of
money ordinarily are not considered residuary beneficiaries, except to
the extent the specific amount is not paid in full.
Also, a beneficiary who is not strictly a residuary beneficiary,
but whose devise or bequest is determined by the value of the estate
as reduced by the loss or deduction, is entitled to the carryover or
the deduction. For example, this would include the following
beneficiaries.
- A beneficiary of a fraction of the decedent's net estate
after payment of debts, expenses, and specific bequests.
- A nonresiduary beneficiary, when the estate is unable to
satisfy the bequest in full.
- A surviving spouse receiving a fractional share of the
estate in fee under a statutory right of election when the losses or
deductions are taken into account in determining the share. However,
such a beneficiary does not include a recipient of a dower or curtesy,
or a beneficiary who receives any income from the estate from which
the loss or excess deduction is carried over.
Allocation among beneficiaries.
The total of the unused loss carryovers or the excess deductions on
termination that may be deducted by the successor beneficiaries is to
be divided according to the share of each in the burden of the loss or
deduction.
Example.
Under his father's will, Arthur is to receive $20,000. The
remainder of the estate is to be divided equally between his brothers,
Mark and Tom. After all expenses are paid, the estate has sufficient
funds to pay Arthur only $15,000, with nothing to Mark and Tom. In the
estate's last tax year there are excess deductions of $5,000 and
$10,000 of unused loss carryovers. Since the total of the excess
deductions and unused loss carryovers is $15,000 and Arthur is
considered a successor beneficiary to the extent of $5,000, he is
entitled to one-third of the unused loss carryover and one-third of
the excess deductions. His brothers may divide the other two-thirds of
the excess deductions and the unused loss carryovers between them.
Transfer of Credit for
Estimated Tax Payments
When an estate terminates, the personal representative can choose
to transfer to the beneficiaries the credit for all or part of the
estate's estimated tax payments for the last tax year. To make this
choice, the personal representative must complete Form 1041-T,
Allocation of Estimated Tax Payments to Beneficiaries, and
file it either separately or with the estate's final Form 1041. The
Form 1041-T must be filed by the 65th day after the close of the
estate's tax year.
The amount of estimated tax allocated to each beneficiary is
treated as paid or credited to the beneficiary on the last day of the
estate's final tax year and must be reported on line 14a, Schedule
K-1 (Form 1041). If the estate terminated in 2000 this amount is
treated as a payment of 2000 estimated tax made by the beneficiary on
January 16, 2001.
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