Somewhat related to this thread:
http://www.early-retirement.org/foru...irs-97171.html
I have a question about flexibility in assigning gains from an Estate to multiple heirs in an estate. I'll run this by my tax guy, but thought I'd get my bearings here first.
My MIL/FIL's estates have small cap gains associated with them (gains after the step-up in basis since date of death). The heirs are their 3 kids and the grand kids.
I understand that the 'normal' and 'fair' process is to assign the gains to the K-1s in the same proportion as the distributions. But I'm pretty sure that the IRS doesn't really care how it is assigned, as long as all the gains are accounted for and paid by someone.
So to keep things simple, I'd like to propose that the gains be split evenly across the 3 kids. This avoids sending K-1s to all the grand-kids, and them having to wait for the K-1s and also have their taxes slightly more complex. The 3 kids would need to do K-1's anyhow, so as long as they don't mind accepting a slightly higher tax burden (1/3rd of the total, rather than 1/4th of the total), which I think they will accept, then this seems worth the simplification.
Does anyone know if this is a problem? I assume as long as the IRS sees 3 K-1s that account for the gains, all is good?
-ERD50