Computing Distributable Net Income For Estate 1041 Income Tax Return

[ron6612]

I haven’t done new application yet as want to make sure 1099 payer can use the new EIN. Which name is preferable on the application?

[tagteam]

The name that corresponds with the name on the EIN you already have (on your previous application).

[tagteam]

---

@ron6612 wrote:

I haven’t done new application yet as want to make sure 1099 payer can use the new EIN. Which name is preferable on the application?

---

On the new application, you can use irrevocable or simply the name of the trust (without that word).

@ron6612 

[ron6612]

Everything looks good now and hopefully last question:

on the K1 part 3, line 5 the income distribution is positive but on line 14 it’s showing up as negative?  Is this correct?  

[tagteam]

Does that line have a "H" code? If so, that is the adjustment for the net investment income tax (NIIT).

[ron6612]

Yes, that line with negative amount has an H code. There is another line with E code with small positive amount representing interest income. 

[tagteam]

The "E" and "H" code on Line 14 are for net investment income. The former code (E) is used to calculate any possible investment interest expense deduction (on the beneficiary's return).

[tagteam · Accepted solution]

@ron6612 

If you, as trustee, distribute all of the net income, the beneficiaries will report that income (and pay any state tax due) in their states of residence.