I'm completing an Estate return in TT Business desktop version. The estate only had capital gains and interest that were distributed to 4 beneficiaries. The amount on 1041 line 1 (interest) is $10, line 4 (capital gain) is $7556, line 17 (adj. total income) $7416 and line 18 (income distribution deduction) $7416. The Schedule K-1 for each beneficiary has one entry on line 14 of Code H $-1854 but it would seem that amount should be split between line 1 (interest) and line 4a (net long-term capital gain. All the numbers on the 1041 look correct so I'm not sure what is causing A. these negative amounts and B. what is causing the trust income to go untaxed. I tried to get assistance from support and talked to a live tax agent but neither were able to provide an answer. hoping someone here may be able to provide some guidance.
Line 14 (H code) is an adjustment for the NIIT, if that is even applicable.
You should not be seeing any tax due for the estate since you have distributed all of the income and gain to the beneficiaries.
Thanks for the response. That's my issue, the income is not showing on the beneficiaries K-1, only the NIIT adjustment. That would mean that neither the trust nor the beneficiaries are paying any tax?? Doesn't make sense to me. Also, what would even cause the NIIT entry?