How do I report Cemetery Trust income (IRS 1.671-4 (b)(2)(i)(A)

[4taxvanderinfo]

I have a Grantor Tax Advice Letter with interest to be reported on 1040 line 8a, 1040 line 9a and 1040 schedule D part I line 5, and 1040 schedule D part II line 12.

How can I enter these amounts

Pursuant to IRS Reg IRS 1.671-4 (b)(2)(i)(A)

[RichardG · Accepted solution]

1. line 8a: report as interest income (interest on 1099-INT in TurboTax)
2. line 9a: report as ordinary dividends (dividends on 1099-DIV in TurboTax)
3. Schedule D part I: report as short term capital gain (Stocks, Mutual Funds, Bonds, Other in TurboTax)
4. Schedule D part II: report as long tern capital gain (Stocks, Mutual Funds, Bonds, Other in TurboTax)

[MikeM1955]

Richard appears to be correct in the solution but TurboTax Deluxe 2019 is not helpful in entering the data.  Instead of providing a simple worksheet to enter the data provided, you are left to make up data about forms not received and guess about how to make it up correctly.

As prepaid funeral expenses are likely reasonably common, it is disappointing that Intuit/TurboTax has not made it easier.

[lmhebert5]

for my 2021 taxes, I have received a Grantor Tax Advice Letter associated with our preneed funeral trust and that letter says I must report short and long term capital gains. There is no known way to enter the gains and loses for our joint taxes. Tried a Turbo Tax "expert" yesterday and that person could not help me. If any of the readers have been successful with entering these values, please comment.

[AnnetteB6]

You would enter the information reported on the Grantor Tax Advice Letter as if it were reported to you on a Form 1041 K-1.

After you have entered the initial information about the trust, you will get to the section where you can select the boxes to fill in.  Put a check beside Boxes 1-5.  This will allow you a place to enter the long-term and short-term capital gains (box 3 and box 4a).  Then, the information will be transferred to the appropriate section of your Form 1040.  

Use the following steps to get started:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “K-1” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to K-1”
• Click on the blue “Jump to K-1” link
• Answer Yes to get started
• Choose Start beside Estates or Trusts (Form 1041) and enter your information

@lmhebert5