A couple of capital gain question for trust accounting:
1. Is there a way in TurboTax to distribute capital gains to K-1's in an unequal manner? Today, I see capital gains being distributed based upon a beneficiaries distribution income percentage of the total distribution income. I do not want to use those percentages...they are close to equal. But the reality is that 3 of the beneficiaries sold stock to get cash and 1 just transferred stock. So the three should be allocated the capital gains and the other should have zero. But TurboTax gives no way, that I can see, to not use those percentages and just be able to say how much capital gains each beneficiary should have. For example...assume capital gains is $6k. And assume we all got the same distribution amount meaning our percentages are 25%. Each beneficiary will see $1500 on their K-1. However, we really need to see $2k on three of the K-1's and zero on the other. But there is no way to do this allocation in Turbotax that I can see. Any thoughts anyone?
2. Another question...capital gains are added to other incomes to give a total income on the 1041, line 9. Deductions are then taken out to give adjusted total income. That is used to derive distributable income using Schedule B. And that adjusted figure has capital gains in it. In schedule B, capital gains are shown and then subtracted giving the final distributable income which is pretty much equal to adjust total income. But again, this distributable income contains capital gains in it. Yet, capital gains comes over on the k-1 as its own line item which is added to the distributed income on the k-1. It seems to me that the capital gain amount is then represented twice on the K-1...in the distribution amount and as its own line item. That seems very wrong. What am I missing here?
Simple example: Let's assume $10 cap gain and $10 other incomes on the 1041. Total income would be $20. Let's assume no deductions. Schedule B then shows $20 as distributable income. If all income is distributed to 2 beneficiaries, they would see $5 of capital gains and $10 of distributed income on their K-1. That adds up to $15 of taxable income on their K-1. But, they were only distributed $10 and should only be taxed for $10. It just feels like capital gains are represented twice...in distribution amount and as true capital gains. It feels wrong to me.
Any insight would be appreciated. Thanks so much.
