Example Form 1041 and Schedules K-1

[incumbent]

Is anyone able to directly send me or provide a link to or post example attachment(s) of a Final Return Form 1041 and Schedules K-1 with a loss on a home sale and estate funds distributed to beneficiaries?

[tagteam]

Entering this transaction should not be overly difficult.

Did the estate actually sell the decedent's home? Enter it in the Investment Income section.

[incumbent]

I've used the software to prepare the Form 1041 and Schedules K-1 but I would like to compare the final return to an example(s).

[tagteam · Accepted solution]

If this helps:

You should have a Form 8949 showing the sale, a Schedule D showing a long-term loss, and a K-1 (or K-1s if there is more than one beneficiary) showing the loss on Line 11 (with a D code).

[incumbent]

The federal tax return contains Form 8949 and Schedule D but there are five beneficiaries/K-1s and they all have blanks on Line 11 Final year deductions. In fact, each K-1 is blank except for Part I Information About the Estate and Part II Information About the Beneficiary. However, I have no TurboTax errors.

Three beneficiaries were distributed 25% and two beneficiaries were distributed 12.5%. Am I supposed to manually enter a capital loss on each K-1 Line 11 via Forms Mode? If so, what amounts do I enter on each K-1 Line 11? Am I supposed to calculate each beneficiary's capital loss using his/her year-end distribution as a percentage of the capital loss limitation ($3,000) or the total loss (~$37,000) or allocate in some other manner?

[tagteam · Accepted solution]

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@incumbent wrote:

Three beneficiaries were distributed 25% and two beneficiaries were distributed 12.5%. Am I supposed to manually enter a capital loss on each K-1 Line 11 via Forms Mode? 

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No. Indicate that the estate is filing its final return and the indicate that distributions were made. Immediately enter Forms Mode, open each K-1, and enter each beneficiary's percentage on the Beneficiary's Allocation Smart Worksheet (on Line B1).

[incumbent]

On the Beneficiary's Allocation Smart Worksheet, Line A1 is populated because I entered the distributions in Step-by-Step Mode and Line B1 is populated per your instructions.

However, it says "A  Enter this beneficiary's dollar amount of:     B Or, enter this beneficiary's percentage of:"

Even though the Beneficiary's Allocation Smart Worksheet instructions say "Or," am I still supposed to have amounts on both Lines A1 and B1?

[tagteam]

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@incumbent wrote:

Even though the Beneficiary's Allocation Smart Worksheet instructions say "Or," am I still supposed to have amounts on both Lines A1 and B1?

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That is the typical behavior of the program; if you clear the percentage, the actual figure in A1 will disappear.

[incumbent]

The estate is a PA resident but each beneficiary is a PA nonresident. Each PA Schedule NRK-1 is blank except for Section I - General Information similar to how each Federal Schedule K-1 was before I entered each beneficiary's percentage on the Beneficiary's Allocation Smart Worksheet, like you instructed.

Do you know if I'm supposed to follow similar procedures on each beneficiary's PA Schedule NRK-1 as I did on each Federal Schedule K-1 to generate similar information as what is now reported on Federal Schedule K-1 Line 11 Final year deductions? If so, how? I don't see any sort of "PA" Beneficiary's Allocation Smart Worksheet.

[tagteam]

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@incumbent wrote:

....I don't see any sort of "PA" Beneficiary's Allocation Smart Worksheet.

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I am not certain about PA, in particular, but do know that at least two states (in the 1041 module) require direct entries in Forms Mode; PA may be another.