An individual (beneficiary) came to me after she already filed a 1041 for her father's estate. The only income in the estate was a Traditional IRA that was distributed to the estate worth $343,000. The person filed the 1041 and paid (or the estate paid) $127,105 in taxes ($125,006+penalty and interest $2099). The way she filed, she didn't create a K-1 to herself for her personal tax return.

So it appears the return was completed in error. My question: The income was $343,000. Was she also suppose to deduct the $343,000 on line 18 and then the estate would have paid $0 taxes and the full burden would have been on the beneficiary, hence the  K-1 for the full $343,000? or what should the estate have paid (37% of what amount), and then the deduction would have been the difference?