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Posted by D. Stussy on March 31, 2008, 12:29 am
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> I have an estate that cashed in substantial US Bond interest. I am
> trying to determine if I should amend the decedents final return
> (2006) and include the interst on the final 1040 or include on the
> 1041.
>
> No income has been distributed to the beneficiaries at this point (new
> client). I am doing a 12/31/07 Form 1041. Can I report the income
> (interest) on a K-1 if the income remains in the trust? Is it too late
> to distribute and report on K1? Note that the K1 approach would result
> in the lowest tax.
If the income remained in the trust, I don't see why it would be listed on
the K-1 (DISTRIBUTED income).
> If the only option is that it would be taxed at the estate level
> (which I suspect) what penalty/interest charges can I expect on the
> 2006 Form 1040X. I have only run into interst charges on prior amended
> returns I've done. This is a large one so I don't want a surprise FTP
> or FTF penalty.
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