It depends on local (state) law but usually capital gains are taxed to the trust or estate; only "other income" flows through to the beneficiaries.  Unless it's the 1041 final return.  Is it?  Have you marked it as Final?

Hi Bob, thanks for your response. I did not check off Final Return, after doing so still no K-1s popping up for any of the kids. So again, I'm convinced I'm doing something wrong here. Unless I suppose the K-1s won't automatically populate and I have to do it?

How soon after death did he buy his siblings' shares? Are you using date of death FMV as basis?

I wouldn't expect a gain unless the estate has held the property for a long time.

You probably have a Diagnostic telling you to distribute the gain to the beneficiaries.

EDIT: In Lacerte you would. I don't know about ProSeries.

Hi, so yes the cottage has been in the Estate's possession since Sept 2018. The one brother bought it out November of 2023.

That explains the gain.

@sjrcpa With ten beneficiaries I would expect about five years for the deal to close, resulting in a gain.  

That makes sense.