Final Trust Return - K-1's not showing distributed amounts correctly

[htccfo09]

In filing a Final Tax return for a joint revocable living trust - the K-1's do not show correctly on distribution amounts.   In Introduction tab it is saying final return must be a complex filing.  This is a trust with 4 beneficiaries that all get 25% equally.  But after putting in all other info (dividend income, stock appreciation, etc.)  cannot get K-1's to match the distributed amounts. 

Note there were assets (bank accounts, Stocks) in trust that were not income but just assets converted to cash for distribution.  When inputting information where I think it goes the K-1's do not have amounts on them that are correct and in trying several ways cannot see any "help docs" that cover this - as I need to get out the 4 different K-1's with correct amount on them.    That is - the amount of 2020 income as well as the full distribution of assets - all divided per the 25% per shareholder.     Can someone point me in right direction?   Thank you

[tagteam]

I have to presume you are preparing a return for a separate taxable entity and not a grantor trust (the latter of which is typically treated as disregarded for federal income tax purposes).

The K-1s will not show any figures for distributions of trust corpus (principal). In fact, if that is all you are distributing, you may not even be required to file a Form 1041.

A 1041 is required to be filed if the trust has any taxable income for the tax year or gross income of $600 or more (regardless of taxable income), and a couple of other rare instances. 

See https://www.irs.gov/instructions/i1041#idm140229124997744

If the trust had income (or gain from the sale of securities), then you need to make a distribution in the Distributions section of the program.

[htccfo09]

Thanks for the quick reply. State is Florida - this was a revocable living trust where the grantor died in 2019 and some income was derived in 2020 (about 11k) mostly from stock appreciation & over the $600 threshold.   

Full distribution was already been made when stocks sold in mid 2020 so I want to pass the tax any 2020 income on to beneficiaries. 

So questions on turbo tax is - it shows the 11k of income and seems to pass on to individual K-1's.

However, the total amount distributed from the trust assets (not generated income) was higher and don't see where that can go in the TT interview area or if I need to enter that somewhere where beneficiaries get a K-1 that actually match the distribution they received ..... 

ps.  I have used Turbo tax for years but 1st time in using "TT business" for a trust  distribution scenario -used 2019 only to show grantors death and establish IRS number for it &  to do a final return this year once all distribution paid and 2020 info in. 

[tagteam · Accepted solution]

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@htccfo09 wrote:

So questions on turbo tax is - it shows the 11k of income and seems to pass on to individual K-1's.

However, the total amount distributed from the trust assets (not generated income) was higher and don't see where that can go in the TT interview area or if I need to enter that somewhere where beneficiaries get a K-1 that actually match the distribution they received ..... 

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Simply enter that amount as the distribution to the beneficiaries. 

Typically, the entire amount distributed will appear on your 1041 (Schedule B, Line 10) but only the actual income or gain will be passed through to the beneficiaries on their K-1s.

In short, corpus (principal of the trust) that is distributed to the beneficiaries but that is not otherwise taxable will not appear on the K-1s.

[htccfo09]

10.4    thanks for the help