IRS Publication 559 — Survivors, Executors, and Administrators

doesn't include a recipient of a dower or curtesy, or a beneficiary who receives any income from the estate from which the loss or excess deduction is carried over.

Allocation among beneficiaries. The total of the unused loss carryovers or the excess deductions on termination that may be deducted by the successor beneficiaries is to be divided according to the share of each in the burden of the loss or deduction. Example. Under the parent’s will, Ash is to receive $20,000. The remainder of the estate is to be divided equally between Ash’s siblings, Danny and Robin. After all expenses are paid, the estate has sufficient funds to pay Ash only $15,000, with nothing to Danny and Robin. In the estate's last tax year, there are excess deductions of $5,000 and $10,000 of unused loss carryovers. The total of the excess deductions and unused loss carryovers is $15,000 and Ash is considered a successor beneficiary to the extent of $5,000, so Ash is entitled to one -third of the unused loss carryover and one -third of the excess deductions. Ash’s siblings may divide the other two -thirds of the excess deductions and the unused loss carryovers between them. Transfer of Credit for Estimated Tax Payments When an estate terminates, the personal representative can elect to transfer to the beneficiaries the credit for all or part of the estate's estimated tax payments for the last tax year. T o make this election, the personal representative must complete Form 1041 -T , Allocation of Estimated Tax Payments to Beneficiaries, and file it either separately or with the estate's final Form 1041. The Form 1041 -Tmust be filed by the 65th day after the close of the estate's tax year.

Caution: Filing Form 1041 -Twith Form 1041 doesn't change the due date for filing Form 1041 -T . The IRS will reject a late -filed election. If Form 1041 -Tis rejected and Form 1041 was filed based on a successful election, then the personal representative must file an amended Form 1041, including amended Schedule(s) K-1.

The estimated tax allocated to each beneficiary is treated as paid or credited to the beneficiary on the last day of the estate's final tax year and must be reported in box 13 of Schedule K -1 (Form 1041), using code A. If the estate terminated in 2025, this amount is treated as a payment of 2025 estimated tax made by the beneficiary on January 15, 2026.

Estate and Gift Taxes Caution: This publication doesn't contain all the rules and exceptions for federal estate, gift, or generation -skipping transfer (GST) taxes, nor does it contain all the rules that apply to nonresident noncitizens. If you need more information, see Form 709; Form 709-NA; Form 706; Form 706-NA, United States Estate (and Generation -Skipping Transfer) Tax Return, Estate of nonresident not a citizen of the United States; and the related instructions. This publication also doesn't contain any information about state or local taxes. That information should be available from your state and local taxing authority.

The discussion below is to give you a general understanding of when estate, gift, and GST taxes apply and when they don't. It explains how much money or property can be given away during life or left to heirs at death before any tax will be owed. If the decedent gave someone money or property during the decedent’s life, the personal representative may have to pay the federal gift tax on behalf of the decedent if it wasn't previously paid. The money and property owned by the decedent at death is the estate and may be subject to federal estate tax. This is in addition to any federal income tax that is owed on the gross income of the estate. Most gifts aren't subject to the gift tax and most estates aren't subject to the estate tax. For example, there is usually no tax if a gift is given to a spouse or charity or if the estate goes to the decedent’s spouse or charity at death. If gifts are made to someone else, the gift tax usually doesn't apply until the value exceeds the annual exclusion for the year. See Annual exclusion under Gift Tax, later. Even if the gift or estate tax applies, it may be eliminated by the applicable credit amount, discussed later. Person receiving the gift or bequest. Generally, the person who receives a gift or bequest of property from an estate won't have to pay any federal gift tax or estate tax. Also, that person won't have to pay income tax on the value of the gift or inheritance received. Note: Gifts or bequests received from covered expatriates after June 16, 2008, may be subject to a tax which must be paid by the recipient. Consult a qualified tax professional for more information. No income tax deduction. Making a gift or leaving property from an estate to heirs doesn't ordinarily affect federal income tax liability. The value of gifts made (other than gifts that are charitable contributions) or any federal gift tax resulting from making those gifts can't be deducted from income tax liability. The value of any bequests made or estate tax resulting from making bequests is also not deductible from income tax liability.

Filing requirements. For estate tax purposes, the personal representative may be required to file Form 706. If death occurred in 2025, Form 706 must be filed if the gross estate of the decedent, plus any adjusted taxable gifts and specific gift tax exemption, is valued at more than $13,990,000. Form 706 must also be timely filed if the estate elects to transfer any DSUE to a surviving spouse (this is also known as the portability election), regardless of the size of the gross estate.

If Form 706 is required, the return and payment of any tax is due within 9 months after the date of the decedent’s death. T o apply for an extension of time to file the return 36 Publication 559 (2025)