How do I enter assigned STCG on a 1041 for a trust using TurboTax Business?

[davidsgibson]

I'm filing a return for a trust using TurboTax for business and I don't see how to enter short term capital gains that are assigned by a mutual fund. Ordinary short term capital gains are clear, but they require me to enter basis and a cost, which are not available with an assigned capital gain. Where can I enter this information?

[tagteam]

Generally, you would need to enter this type of gain as ordinary income.

Mutual funds typically distribute gain as capital gain distributions, which are treated as long-term.

[davidsgibson]

Not all mutual fund capital gain distributions are long term Yes, mutual funds typically distribute capital gains that are long term, but from time to time they can issue short term capital gain distributions as well. LTCG and STCG are taxed at different rates, and as you say, STCG is taxed as ordinary income. Are you suggesting that I enter the STCG distribution as something other than a STCG, something that is taxed at the ordinary income rate? What would you suggest I claim it as - interest, dividends? How is that going to jibe with 1099s sent to the IRS showing it was STCG? It's hard to believe that having me mis-report the data is the best solution that TurboTax has to offer here. Can you clarify? Most helpful would be if somebody could identify a form and  line where I should enter this info (somewhere on Schedule D, lines 1-6?).

Thanks

[SusanY1 · Accepted solution]

When mutual funds distribute net short-term capital gains these are reported as ordinary dividends.  They will be reported in Box 1a of the Form 1099-DIV that the mutual fund company will provide after the close of the year.   

You should wait until you have the 1099-DIV from the mutual fund company and then enter the data as it appears on that form into the corresponding boxes in the TurboTax program in the area for dividend income/Form 1099-DIV. 

If you are trying to recreate a lost form for a prior year return (which may be available upon request to the fund company) or estimate numbers while you are awaiting forms, enter these in TurboTax Business in Box 1a (Total ordinary dividends) in the entry area for Form 1099-DIV.   Reporting it this way ensures it will match up with what the IRS has in their records. 

On Form 1041, this number will transfer to Line 2a..

You will see here (1099-DIV filing instructions) that this is where the IRS instructs that net short-term capital gains from mutual funds should be reported for proper handling on the tax return. 

[davidsgibson]

@SusanY1Thanks for a clear, well documented explanation of what's happening here. One of the few times I've read an answer and couldn't even think of another question to ask. You checked all the boxes for me