Are Partial Principal Distributions from an Estate Required to be Reported on a K-1 if the Current Year Income is Less than the $600 Filing Threshold

[JAS 1947]

I'm trying to help an administrator of an estate comply with IRS requirements. The estate's first 1041 included income which was all taxed at the estate level on 1041. The administrator has filed written requests for abatement of penalties, which is the sole reason the estate is still open after 2 years. The Estate had a taxable loss in 2023. However, a partial distribution of the estate's assets was made during 2023. There were also some expenses that could be claimed by the beneficiaries on Schedule A if they exceed the miscellaneous expense threshold.

1. Would you file a Form 1041 even though there is a taxable loss?

2. Are partial distributions from principal required to be reported on Schedule K-1?. 

Thank you.

Joe S

[jeffmcpa2010]

1. Yes

2. Where are you planning to list them on the K-1?

[abctax55]

I'm curious how a 'taxable loss' is handled ???

[sjrcpa]

A loss won't pass through to beneficiaries unless it is a final return. At that point it is generally excess deductions on termination.

[abctax55]

Susan.... you missed my *tongue in cheek". When is any 'loss' taxable 😉 ??