In Turbo Tax Business, how is the accounting income calculated for Form 1041?

[ed-norton]

The comment about capital gain is confusing.  Capital gain allocated to income is included, but capital gain is normally excluded?  What sense does that make?  What is the difference between capital gain and capital gain allocated to income?

[Anonymous_]

Capital gain is typically allocated to corpus by many trust instruments and local law (i.e., the Uniform Principal and Income Act).

If the trust instrument specifically states capital gain is allocated to income, or provides that the fiduciary has the discretion to allocate capital gain to income and the fiduciary does so and distributes the gain as a matter of course to the beneficiary(ies), then the gain simply needs to be "allocated to income" in TurboTax.

[Anonymous_]

"In Turbo Tax Business, how is the accounting income calculated for Form 1041?"

I presume you are referring to trust accounting income as shown on the Trust Accounting Income Smart Worksheet on the 1041 in TurboTax Business. 

In that event, then generally, the trust accounting income displayed represents all income (including tax-exempt income) less deductions (excluding the trust exemption) plus any capital gain that you have allocated to income in the program (note that capital gain would ordinarily be excluded from the calculation).

[ed-norton]

The comment about capital gain is confusing.  Capital gain allocated to income is included, but capital gain is normally excluded?  What sense does that make?  What is the difference between capital gain and capital gain allocated to income?

[Anonymous_]

Capital gain is typically allocated to corpus by many trust instruments and local law (i.e., the Uniform Principal and Income Act).

If the trust instrument specifically states capital gain is allocated to income, or provides that the fiduciary has the discretion to allocate capital gain to income and the fiduciary does so and distributes the gain as a matter of course to the beneficiary(ies), then the gain simply needs to be "allocated to income" in TurboTax.