A couple of questions about Capital Gains in a trust, distributions and how that is reported. We inherited shares of stock into my father’s trust at his passing this past year. Shares of stock were sold (and capital gains incurred) to distribute cash to my 3 siblings. I personally had shares transferred to another account (no captital gains).
1. It appears that the capital gains show up as income in both the 1041 and the K-1’s (divided) across all 4 of us. That feels to me like double taxation (in beneficiaries taxes and in 1041 of the trust). Am I wrong? It seems to me that the capital gains should show as pass thru only and be taxed on the beneficiaries taxes. What am I doing wrong?
2. The income in the K-1’s seems to be fairly equally divided, including capital gains. However, for capital gains only, I don’t want to see capital gains on my K-1 and it should be divided across my 3 siblings since stocks were cashed to distribute cash to them. But I can’t get TurboTax to allow me to do that. Does anyone see what I might be doing wrong here?
Thanks so much for your help.
