I don't know how to account for disbursing inheritance.

Do I debit capital and credit cash? Or is this an expense?
By the way... THANK YOU!!

Disbursing an inheritance? To me an inheritance is that you get when someone passes away, and I certainly can't see why a company would be "disbursing" one. I don't get it. Do you think you could elaborate?

(Unless of course you're in some country using that term in a completely different way. In which case, a clarification as to what that means would help.)

Here is the deal!
My boss died and we had to pay out to his grandchildren $50,000 each. I debit what and credit cash. If I expense it then it will be lost when we do the estate taxes.

Thanks for responding

The company didn't die, your boss did. If he was the sole owner, technically the company ends with his death. His net value in that company is part of his estate. The inheritance is coming from his estate. Even if it's paid out of cash that was in the company, all that's doing is skipping a step of going into the owner's estate and then back out to the grandkids. The company isn't paying an inheritance. It could be sold or transferred or whatever, but the net value of it still belonged to him. If it was a partnership, there's different ways that might be handled depending on what type of agreement they had.

But it's certainly not going to be an expense to the company, but rather involving the equity.

Since this was part of his estate, I'd let the attorney who's doing his estate take care of it and make sure it's all done properly.

I see no one else has responded to this. I can tell you that the company isn't paying an inheritance. It was owned (or partially owned) by the boss, and that net value belongs to his estate. The estate pays the inheritance. This is going to be related to his equity, but exactly how you handle it may depend on the situation. (The simple answer is that it's just treated like a withdrawal on his part, but I'm calling that the simple answer for a reason.)

Estate stuff is a different ball game and not one I really know. There may be some legal junk involved in this that would make a difference in how it's handled. (Like if it's a partnership and there was any kind of agreement on what to do in case of death of a partner or whatever.) You may need to get in contact with the attorney on the estate.

We have a lawyer, tax lawyer, tax accountant and a number of CPA'S... you are right, it is taken out of equity.
Thanks for your help!