My wife is a beneficiary and we have received a copy of the Schedule E statement of distribution.

There are four non-profit beneficiaries and three individual beneficiaries, one of them is my wife. The attorney is subtracting the income taxes the estate has paid before the distribution from the three individual beneficiaries, but not from the four non-profit beneficiaries.

He explained that non-profit organizations do not pay taxes. However, since the income taxes are for earnings prior to the diseased, we believe that the taxes should be subtracted from the amount to be distributed so that the distribution is reduced for all beneficiaries.

Hello jm:

You have a convincing argument, at least to me. That, certainly, may be of little comfort to you.

In any event, the question is what are you going to do about it. The lawyer told you his position, and I'll becha he's sticking with it. I don't know if he's right. Do you have an attorney? Is the difference worth the price of hiring an attorney, keeping in mind you might not win? Plus, a challenge will hold up the distribution for everybody... Will the other individuals join you? That would certainly help defray expenses, and may cause the lawyer to rethink his position.

Sorry, I couldn't give you THE answer. In this case, what the judge says is THE answer. Or whatever you agree to before a judge has an opportunity to decide.

excon

Very interesting situation & unusual I would guess. From an Accounting standpoint, expenses must follow the assets. Since taxes apply only to assets other than non-profit assets, it would seem the taxes should be deducted from the assets that produced the tax liability.