[WSBAPT] Non pro rata allocation of taxable income to beneficiaries

[Mark Higgins]

Eric-I don't think your desired selective allocation is allowed.  Have you
thought about making a distribution of the IRA dollars out to just the one
beneficiary this year, and then distributing out the others' shares next
year?  Since estate income in 2015 follows the distributions in 2015 on the
K-1s you might have succeeded in putting the IRA income on just the one
beneficiary.  You'd want to double check with a cpa whether this would
work.​

Mark

On Thu, Apr 2, 2015 at 5:04 PM, Eric Nelsen <Eric at sayrelawoffices.com>
wrote:

>  Marcus--Thanks, I have never heard of this--I'm definitely glad to hear
> it.
>
>
>
> In this case, though, the heirs are okay with getting the cash; we're just
> trying to minimize the tax hit by selectively allocating the income
> pass-through to low-income beneficiaries. Any thoughts on whether that's
> allowed?
>
>
>
> Sincerely,
>
>
>
> Eric
>
>
>
> Eric C. Nelsen
>
> SAYRE LAW OFFICES, PLLC
>
> 1320 University St
>
> Seattle WA  98101-2837
>
> phone 206-625-0092
>
> fax 206-625-9040
>
>
>
>
>
>
>
> *From:* wsbapt-bounces at lists.wsbarppt.com [mailto:
> wsbapt-bounces at lists.wsbarppt.com] *On Behalf Of *Marcus Fry
> *Sent:* Thursday, April 02, 2015 4:28 PM
> *To:* 'WSBA Probate & Trust Listserv'
> *Subject:* Re: [WSBAPT] Non pro rata allocation of taxable income to
> beneficiaries
>
>
>
> Eric:
>
> I disagree about “no rollover options.”  First, it’s technically not a
> rollover, as rollovers are only for spouses.  However, many financial
> institutions permit the PR to instruct the establishment of inherited IRAs
> in each beneficiary’s name.  Natalie Choate’s website list some good
> companies. http://www.ataxplan.com/bulletinboard/ira_providers.cfm
>
>
>
> I suggest moving the IRA to another institution as suggested by Choate if
> the one you are at will not cooperate.
>
>
>
> Marcus J. Fry
>
> Lyon, Weigand & Gustafson, P.S.
> Adoption Attorney*
>
> P.O. Box 1689
> Yakima, Washington  98907
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> *From:* wsbapt-bounces at lists.wsbarppt.com [
> mailto:wsbapt-bounces at lists.wsbarppt.com
> <wsbapt-bounces at lists.wsbarppt.com>] *On Behalf Of *Eric Nelsen
> *Sent:* Thursday, April 02, 2015 3:57 PM
> *To:* WSBA Probate & Trust listserve (wsbapt at lists.wsbarppt.com)
> *Subject:* [WSBAPT] Non pro rata allocation of taxable income to
> beneficiaries
>
>
>
> Estate has four equal beneficiaries. Decedent had an IRA that paid
> directly to Estate, so no rollover options.
>
>
>
> One of the beneficiaries is in a very low tax bracket, and all four
> beneficiaries agree that they'd like all the tax liability for the IRA
> allocated to that one beneficiary. (There's enough other cash in the estate
> to allow complete distribution of the IRA to one and make compensatory
> distributions to the other three of untaxed inheritance dollars.)
>
>
>
> Is that allowed? So the Estate would do a tax return and issue K-1s,
> allocating all income liability to one out of the four beneficiaries, and
> none to the other three?
>
>
>
> Any idea where I would look for the governing rule? IRS Code or Regs I
> would guess, but not sure where...
>
>
>
> Sincerely,
>
>
>
> Eric C. Nelsen
>
> SAYRE LAW OFFICES, PLLC
>
> 1320 University St
>
> Seattle WA  98101-2837
>
> phone 206-625-0092
>
> fax 206-625-9040
>
>
>
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-- 
Mark T. Higgins
Mark T. Higgins, P.C.
P.O. Box 57
Darrington, WA 98241
206-491-2420
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