decedents credit card debt paid by his estate

Forum|Forum|5 years ago
December 18, 2020
5 replies
41 views

Decedent had a 1099-R. This was the only thing in his estate. Executor/Beneficiary paid decedent's outstanding credit card bills. Can the estate deduct this expense on the 1041 so it's not included in taxable income to the beneficiary on the K-1.

Thank you for the help!

Linda M

ProSeries Professional

This topic has been closed for replies.

Best answer by sjrcpa

There must have been money in the estate with which to pay the bill.

What was the credit card bill for? Look at the details and see if any of those are tax deductible items. Otherwise, debts of the decedent are not deductible on Form 1041.

sjrcpaAnswer

Level 15

There must have been money in the estate with which to pay the bill.

What was the credit card bill for? Look at the details and see if any of those are tax deductible items. Otherwise, debts of the decedent are not deductible on Form 1041.

The more I know the more I don’t know.

L

Linda MAuthor

Level 3

Thank you for your reply.

The only money in the estate was $38,000 from the 1099-R. The executor paid $6,000 of the decedents credit card bills, leaving $32,000 in the estate account. I entered $38,000 on line 8 of the 1041 (Other Income) which was the gross amount. Should I have entered $32,000 instead?

BobKamman

Level 15

What did you enter on Line 10, Schedule B, Page 2 of Form 1041 (I'm looking at 2020 version)?

BobKamman

Level 15

Taxable income to beneficiary shouldn't be more than amount actually distributed to him. If the 1099-R was for $50,000 and the creditors got $20,000, the beneficiary should have received $30,000 and should pay tax on it. The estate may have $20,000 taxable income and should have set aside enough money to pay that tax before making final distribution.

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