Taxes on inherited interest from annuity received in distribution after death of ann

[danieljdunne3]

My wife's mother(the annuitant)passed away in November 2012. Her estate was all cash with a substantial amount in an annuity. The annuity was cashed in and my wife received 50% of the principal and interest in the annuity and each of our two adult children received 25% each of the principal and interest in the annuity. Are there any deductions than can be taken from the taxable interest distributions from the annuity interest? Can we deduct the executor's commissions paid (approximately $39,000.00)in the same proportions 50% 25% & 25% from the interest to reduce the taxable amount of interest income for each beneficiary: thereby reducing their tax liabilities? If filed electronically will I be able to print out the information contained in the K-1 Forms with my printed copies? each beneficiary's 1099R as well? We live in North Carolina and the total cash estate was just under $800,000.00. Thank you for your help. Please submit your answers and comments as expeditiously as possible.