Trust distributed income not carrying over to the beneficiaries K-1's

[Jab426]

I posted an issue previously but I think the title was confusing.

I’m completing a Trust return that has income consisting of interest and capital gains and distributed all the income to the beneficiaries. The 1041 properly shows the income and distribution amounts bringing the trust income to zero, but the income that was distributed is not showing on the K-1, interest and net long term gain fields are blank on all four K-1’s. The only item reflected is a negative net investment income tax adjustment on line 14.

Looking at the Schedule D, Part 3 seems to be applying the Trust exemption amount ($100) in lines 18a-c to the beneficiaries (column 1) and the income to the Trust (column2) which seems to me those figures should be reversed.

If I manually change the amounts in Beneficiaries column 1 from $100 to match the amounts in Total column 3, the distributed income amount is then carried over to the K-1’s as I would expect and the net investment item is gone.

I guess I’m confused. As it stands, without any manual adjustment, neither the Trust nor the Beneficiaries are being taxed which doesn’t seem right. I did talk with one of TT tax experts yesterday and we walked through every step I completed on a screen share and he said it was right but couldn’t address the issue, although we did not look at the Schedule D which seems to be where my issue resides.

Is there an issue within TT or am I doing something incorrectly? Since I am not an expert here, I really don’t want to manually force an outcome.

Thanks.

[M-MTax]

With respect to capital gains in TurboTax Business, make sure that you are both allocating the gains to income AND allocating the gains to the beneficiaries. If you miss one, the distribution simple won't work properly.

[Jab426]

Thanks. When walking through the software it asks if I've done a distribution to the beneficiaries, to which I answered yes, so I'm assuming that's allocating the gains to the beneficiaries, but how to I allocate the gains to income? I would have thought the program would have done that.

[M-MTax]

The capital gain allocations are in that section of the program (if I recall correctly).

Making a distribution without allocating the gains to income and beneficiaries first won't work.

[Jab426]

Still not sure what I need to do. I allocated the gains to the beneficiaries and to income but the distributed amounts are still not carrying over to the K-1's. Line 4 is blank with the NIIV applied to line 14.

What am I missing?

[M-MTax]

You have two different figures.

[Jab426]

Not sure I'm following you. Allocation of long term gain to the beneficiaries is $7556 and the gains attributable to income is $7556. 

[M-MTax · Accepted solution]

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@Jab426 wrote:

Allocation of long term gain to the beneficiaries is $7556 and the gains attributable to income is $7556. 

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The top screenshot in your previous post shows $100 of long-term gain allocated to beneficiaries.

[Jab426]

Thank you. I thought that screen was percentages not amounts. Working fine now. Appreciate your help.