Question: Donna and Chris are beneficiaries of their brother Mike’s estate. Mike passed away in July 2022, and the fiduciary set up the estate on a fiscal year ending June 30, 2023.
In September 2023, Donna and Chris received a Form K-1, Beneficiary’s Share of Income, Deductions, Credits, etc., from Mike’s estate labeled “2022.” In what tax year are Donna and Chris required to report the income from Mike’s estate?
Answer: Donna and Chris, as beneficiaries of a fiscal year estate, must include their share of the estate income in their tax returns for the tax year in which the last day of the estate’s tax year falls, which is June 30, 2023, in this case. The K-1 was prepared on 2022 forms but the form also states it could be prepared on forms for other years beginning July 1, 2022, and ending June 30, 2023.
If the tax year of the estate is a fiscal year ending on June 30, 2023, and the beneficiary’s tax year is the calendar year, the beneficiary will include in gross income for the tax year ending Dec. 31, 2023, their share of the estate’s distributable net income distributed or required to be distributed during the fiscal year ending the previous June 30.
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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.