k-1 with lots of taxable income

[WITAXLADY]

so family member dies in IL - I have 5 k-1's with lots of taxable income 0- cpa says it is from a 1099-R from an IRA from Merrill Lynch - wouldn't that be stocks on the inside  - so there would be stepped up basis? cost basis? so only a part should be taxable  and then only a part upon dod as inheritance?

Am I mixing up ira's and stocks?

help me think this thru please and can this be brought down tax wise?

Thx you all

[rfassett]

Sounds like an IRA with the estate as the beneficiary (or no beneficiary).  Doesn't matter what is inside the IRA, the distribution is ordinary income subject to ordinary tax that someone has to pay - either the estate or the beneficiaries of the estate.  I am questioning the treatment though because it would seem to me that the estate should be paying the tax.  Sounds like the treatment you are looking at is an effort (although not correct) to move the income to a potentially lower tax bracket.

[SaraEA]

IRA distributions are fully taxable, like rfassett said.  Is it possible to put the estate on a fiscal year and then have it distribute the income to the beneficiaries within the fiscal year?  If the estate gets and keeps taxable income of, say, $100k, it's going to be in the 39.6 bracket plus be subject to the NIIT.  If that income is distributed, it goes on the beneficieries' returns and gets taxed at their individual tax rates.  I don't know if time has run out for this option.  Was the money already distributed?  When did the person die?

[WITAXLADY]

1st distribution  - late k-1 in 2016 and now someone mentioned a second distribution - and I have all their 2017's done for these 6!! except 1 - if they knew there was a 2nd k-1 - could some one think!!  So ya - Why would the estate not pay it - tax too high?

Thx d