[jmkubler]

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.
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[ebaines]

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.
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It's impossible to tell from your description whether the attorney is correct or not. You say that the tax is due on income earned by the deceased before death - in that case the executor ought to be filing income tax on behalf of the deceased, and should pay any tax due out of the estate, before any distributions are made to the beneficiaries. However, the real question here is: what does the will say? If the will directs that all assets be split by percentages among all 4 non-profits and 3 beneficiaries, then I would say you are correct. However, if the will directs that a specific amount of money be left to each of the non-profits and the remainder of the estate split among the three benficiaries, then the attorney is correct.

[AtlantaTaxExpert]

I agree with Ebaines; you have provided insufficient information to properly advise you.

However, if the estates assets earned income during the probate period, a fiduciary tax return (Form 1041) should have been filed. Further, a final tax return (Form 1040) for the deceased must also be filed.