Form 1041 K-1

[HOZAY]

I am preparing a Form 1041 for a Trust. There were 6 beneficiaries during the year.  Due to his death, 1 of them was a beneficiary for only the 1st 6 months. The other 5 were the new beneficiaries for the last 6 months. How do I enter k-1 information among beneficiaries in a non-proportionate manner? That is, so that the nature of the income received (Interest, Ord Div, Net CG, etc) matches the actual income received by them through the year. For example, the majority of the large Capital Gain Distribution was received by the trust in December. Therefore, those who were the beneficiaries in December received the large distribution and should get the benefit of the lower Capital Gains rate.  Thanks.

[Anonymous_]

What do the terms of the trust state about a deceased beneficiary?

Regardless, you will have to make a manual adjustment if you want to make a partial distribution. This can be done in Forms Mode on the K-1(s).

[HOZAY]

Terms require trust income to be distributed to beneficiaries quarterly.  At death, income ceases to deceased and is to be distributed proportionately to new beneficiaries. 

So, you suggest keying the actual amounts to the respective lines of each K-1 in Forms Mode.  Is that correct?

[Anonymous_]

Yes, the only way to accomplish this type of distribution would be to enter actual amounts.

[Mike9241]

if the deceased beneficiary was not distributed the income while alive it may be his/her heirs that need to report this income.  it all depends on the trust provisions.