Should the executor of a Trust pay the tax on the entire amount of proceeds from the home sale, ie: estate, or distribute the funds to beneficiaries for them to pay the tax on income? Or is the estate subject to both taxes?
Hello,
If the estate sales the house and the house sale is reported on the Estate Tax Return (Form 1041: U.S. Income Tax Return for Estates and Trusts). Then gains may be reported on the Form 1041 and the proceeds are distributed to the heirs. We do not support a form 1041, so I suggest you consult with your accountant who is preparing the Form 1040. You will get a Schedule K-1 Form 1041 to report any earnings.
