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

Thu Apr 2 18:36:07 PDT 2015

You might want to be sure to make distribution or divide the IRA before
September 30 of the year after he died if there is a discrepancy in ages.
On Apr 2, 2015 5:21 PM, "Mark Higgins" <markthiggins at gmail.com> wrote:

> 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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>>
>>
>>
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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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