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bigdav160
Level 1

Simple Trust distributions

This has been an ongoing issue with TurboTax business and me for years so it's probably something simple that I am doing wrong. It's a irrevocable Simple Trust and designated as such. However, TurboTax allocates all the bank interest and stock dividends to the Trust.  For example, this year the Trust earned $500 in interest, $7000 in dividends and $7,000 in capitol gains. The Trust income line 18 is $14,500. The K1 distributions line 18 amount is zero. The amounts on the K1 are zero. I do not know how to fix this.

1 Best answer

Accepted Solutions
tagteam
Level 15

Simple Trust distributions

The 1041 module in TurboTax Business can be quirky. 

 

You most likely just need to go through the Distributions section and actually make a distribution to the beneficiaries (even though you should not have to do so in the case of a simple trust).

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12 Replies
tagteam
Level 15

Simple Trust distributions

The 1041 module in TurboTax Business can be quirky. 

 

You most likely just need to go through the Distributions section and actually make a distribution to the beneficiaries (even though you should not have to do so in the case of a simple trust).

Anonymous
Not applicable

Simple Trust distributions

 
Anonymous
Not applicable

Simple Trust distributions

by the way in a simple trust capital gains are genearlly not distributed to benes  just ordinary income.   However  since i can't see the trust document i can't say for sure however from IRS instructions for 1041

 

Simple Trust
A trust may qualify as a simple trust if:
1. The trust instrument requires that all income must be distributed currently;
2. The trust instrument doesn't provide that any amounts are to be paid, permanently set aside, or used for
charitable purposes; and
3. The trust doesn't distribute amounts allocated to the corpus of the trust.
capital gains are corpus.  s if you been distributing them then you have a complex trust. 

Anonymous
Not applicable

Simple Trust distributions

I would also add that unless the trust document permits corpus distrubtions,  if you been distributing them,  you may want to consult a lawyer.   bad things can happen to the trustee. 

WINSOME81
Returning Member

Simple Trust distributions

i have credit shelter that files as a simple trust . I have distributions , federal tax deduction and state tax deduction. how do Where do I enter the federal tax deduction?

WINSOME81
Returning Member

Simple Trust distributions

I entered t he distribution amount in the section. what section does the for federal tax belong?

WINSOME81
Returning Member

Simple Trust distributions

the problem is thubmitted ti this is a Beneficially IRA . The Tax was submitted  to the IRS and heas returned. how?

WINSOME81
Returning Member

Simple Trust distributions

thanks

bigdav160
Level 1

Simple Trust distributions

I went and changed the distribution scheme from percentages to the exact amount of interest/dividends and it made no change to the amount of tax the Trust owed or to the amount distributed (zero) on the K1. I guess I have to learn how to do this by hand. Not only is it a Simple trust, it's a simple trust with one bank account.

 

And yes, I know the difference between the Simple and Complex Trust. I am not trying to distribute capitol gains only interest and dividend income.

 

Instead of double taxation this year I'll send the IRS a check with an extension so I can figure out what is going on here.

Thanks

tagteam
Level 15

Simple Trust distributions

@bigdav160 Enter Forms Mode, open one of your K-1s, and ensure that there is a percentage in Part B of the Beneficiary's Allocation Smart Worksheet.

bigdav160
Level 1

Simple Trust distributions

Thanks tagteam but the percentages are there on the form.

Just under that (part 3) should those lines be blank?

Should the K-1 Worksheet be blank? Form - Distributable Income for Schedule K-1 does show amounts in line 1 and 2. It's part 2 of that form where the amounts get zeroed out and I am not sure what all those numbers represent.  I would guess the answer to my question is in there.

tagteam
Level 15

Simple Trust distributions


@bigdav160 wrote:

Just under that (part 3) should those lines be blank?


No, Part III should not be blank if you distributed interest and dividend income to the beneficiaries.

 

Frankly, I am not certain as to precisely what is occurring in your case, but the income should be flowing through to your K-1s if you made a distribution in the program. 

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