Which Schedule K-1 form is used to report income earned by an estate or trust?

The correct choice is Form 1041, which is specifically designed for estates and trusts. When an estate or trust is created, it must file a tax return using this form to report its income, deductions, and credits. The income earned by the estate or trust is then passed through to beneficiaries, who receive a Schedule K-1 (Form 1041) detailing their share of the income, deductions, and credits. This allows beneficiaries to correctly report the income on their personal tax returns.

In contrast, Form 1120S is used for S corporations, Form 1065 is for partnerships, and Form 8582 deals with passive activity losses for individuals and certain entities. These forms serve different entities and are not applicable to estates or trusts, confirming that Form 1041 is the appropriate choice for reporting income earned by an estate or trust.