"Why aren't excess deductions on final 1041 allocated to K-1's?"
They absolutely should be but, on occasion, they don't quite get all the way through to the K-1s. You can resolve this issue by making a distribution of an amount, even if that amount is negative [see first two screenshots].
Additionally, enter Forms Mode (click the Forms icon in the upper right side of the screen) and ensure that there is indeed a percentage entered on Lines B1 and B2 in the Beneficiary's Allocation Smart Worksheet [see third screenshot]. If not, manually enter the appropriate percentage to be allocated to the beneficiary on each K-1.
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