What does "gross income sourced at beneficiary level" mean when TT is asking for details about foreign income reported in box 14 of a trust k-1?

[jtax]

Let me try again. Sorry for the error.

[jtax]

[dkest-293]

how to calculate income at beneficiary level 

Gross income at benificiary level is all income on K1 form but do not add 2b as they are already together in 2a.

Gross income at benificiary level us sourced income is all income minus foreign income(box 14 added together)

Gross income at benificiary level foreign sourced income is all of box 14 added together 

[dturboklee]

It would be better if TurboTax had more incisive questions but I don't understand how or where to enter the "Qualified Dividends" portion of the FOREIGN TAX CREDIT INFORMATION (LINE 14, CODE B) in conjunction with the "Gross Income" and "Taxes" appended to my beneficiary K-1.

I use the desktop premier version of TurboTax.

[DaveF1006]

If you have you have qualified dividends reported with a 1099 DIV, there should be a supplemental statement that came with the 1099 DIV that mentions what percentage of the qualified dividend is foreign. Sometimes it may be  expressed as a dollar amount.

if you didn't get a statement, you may need to contact the broker to find out what that amount should be.

[AlwaysQuestions]

I have been trying to following this logic, but...So, I have income in Box #1 and Box #2a which adds up to

the figures in box 14 E. Do I  include the figure in Box #7 which is Net rental real estate income?

[DaveF1006]

Yes, enter all numbers exactly the manner these are reported on the K1. 

@AlwaysQuestions

[AlwaysQuestions]

Thank you for responding Dave,

I have one K-1 with info in Box #1, #2, #13, #14, #19, #20Z.

I know I make 2 entries into TT, or so I've been told,  is one entry with only Box #1 and the other separate

entry with Box #2, #13, #14, #19, #20?

Many thanks.

[DaveF1006]

 I am confused by your question.  Could you clarify because there seems like there are more than two entries that need to be made/

@AlwaysQuestions

[Old_CB]

I've tried every combination of numbers and I keep getting an error that prevents electronic submittal.

K-1 entries on 2a,2b,3,4a, 14B and 14I.  Income listed as included in 2a or 2b as follows:  

- US Government qualified interest reported as dividends; Qualified (2b),  Total (2a).

- FOREIGN dividend income;  Qualified (2b), Total (2a).

K-1 14 code B entry ($ correspond to foreign taxes as below).

K-114I is REIT dividends.

Foreign tax credit (14b) has values for: Gross income, Qualified dividends (same $ as above)  and Taxes.

Ideas very much appreciated; I've been on this for two days.

Bill

[CarsonM1977]

I'm having the same issue as Bill. I had no idea where to source the "US Source / Gross Income" field until I read this thread, but when I enter ((1 + 2a) - 14b Foreign Source / Gross Income), TurboTax tells me I need to fix the error and kicks me right back.

[AlwaysQuestions]

I had the same issue while completing a 1041 return.

My original inclination was to enter the amount on line #9,

Total Income, but TT didn't like that option.

I then entered the amount form my 1041 on line #18, Income

Distribution Deduction. TT found that acceptable.

The difference, in my situation, between the amount on line #9

and line #18, was the amount entered on line #4, Capital Gain/Loss.

TT should just have these computations in their software. Very frustrating

along with not being able to import from a Brokerage Firm when filing a 1041.

Good luck.

[Old_CB]

What is most irritating is when I enter these number combinations, TT turns the entered number RED when I hit Return for the entry. TT, in order to flag the error, must know what the right number is; therefore it should have been computed, as all the K-1 informations show up on the worksheet. Grrrrr!

[Old_CB]

OK. In looking at the "Forms" list instead of "Easy Step" for another reason, I noticed that the K-1 worksheet was flagged with an error alert. So in thinking about Occam's razor, I went to the worksheet Box 14, Code B : Foreign Tax information and noted that on line 5a, Gross Income, there was no entry for "Total" or for  "U. S. Source"  (which I submit is a TT error, as all of these numbers were in the Easy Step dialogue). So I entered the total of K-1  income  (lines 2a+3+4a in my case) in "Total" and subtracted the (already filled by TT) entry for "Foreign" taxes. I entered this result in the blank box for "U. S. Source" and noted that the worksheet error flag disappeared. I then started over with e-file and away went my now errorless return to the IRS!! So I conclude that this is indeed a TT error of not filling in the worksheet with information from Easy Step.

[DrH21]

I've followed this entire thread, and the answers seem to match what I've decided to do, but I have one big worry. Let me start by rephrasing the answers as I understand them..TT (online) flagged the missing 'total' and 'US source' gross income as missing, even though they did not appear on the K-1s. When I add my relevant (interest and total dividends) figures, I do match up with what the K-1 reports as net investment income on 14 E. Emphasis on 'NET' investment income.

For the foreign tax section, I entered the foreign taxes on 14 B and the GROSS foreign receipts when asked in the interview. Emphasis on 'GROSS' foreign income. The difference between GROSS foreign receipts and the foreign taxes is the net foreign income.

For me, there were four missing figures: the total GROSS income sourced at beneficiary (I may have the language wrong), and the US share of same.

The answer in the thread, to this point, seems to be to take the 14 E figure as a total, deduct the foreign gross receipts and arrive at the US share.

My problem is: I'm comparing a GROSS foreign number with a NET total number. It seems to me that, instead, I should deduct the NET foreign figure from the total NET figure to arrive at the US share of the net figure. But how do I then get the US and total GROSS figures?

Well... I contacted the CPA that did the K-1 and obtained the trust tax return, which I've never, ever had to do in a prior year. From that, I could see that the expenses on the trust's returns were proportionally allocated by income type (not quite, but assume so for now). Therefore, since I can see how the foreign expenses relate to the foreign NET, I can apply the same ratio and effectively 'scale up' the remaining NET US portion to arrive at a US GROSS figure, and I can therefore also have the total GROSS figure.

That takes care of two of the missing figures.

TT online also wanted to know what the expenses for US and total are, since I only ever entered the foreign expenses. In the calculation above, to scale up the NET US and total figures to GROSS, I can also calculated the expenses which, in theory, were attributed to the US share. And I can add this figure to the known foreign expenses to arrive at total expenses.

My reluctance came when I had to enter these figures. I had already, in an earlier attempt to fix the problem, done as the answers above indicate: enter the total NET foreign figure as the total GROSS, and ditto for the US. Now, as I go to update it, I'm hesitating because I'm about to override the known NET figures with higher GROSS figures, and I'm afraid that TT online will somehow construe this to mean higher total K-1 income.

So, in a nutshell, I'm hung up on being advised to enter a NET figure where a GROSS figure is requested.

On the other hand, when calculating the allowable portion of a foreign tax credit, the higher US share means a lower overall foreign % of income, which means a lower allowable max foreign credit, so my putting the scaled-up GROSS figures in provides no advantage to the taxpayer. So, even if it's incorrect, I feel like I'm erring in favour of the IRS.