If the summary page for your investment sale shows this as a Long-term sale, you need to review to be sure the box for "decedent" is checked "no" not blank. Or delete the sale and re-enter.
Also, be sure you are reporting on a calendar year and not a fiscal year (this appears at the top of Form 1041).
Yes, you can use the Direct Entry Method on Schedules K-1 to specifically report income & expense items to each Beneficiary. You would need to manually calculate the amounts to report, as TurboTax isn't able to do this on a Form 1041 return.
To use the Direct Entry method, do not enter the Beneficiary's tier distribution amounts or percentage in the Beneficiary's Allocation Smart Worksheet on Schedule K-1; instead, enter this beneficiary's amounts directly on Schedule K-1, lines 1 through 14.
Very important: If you use the Direct Entry method for one beneficiary, you must use the Direct Entry method for all beneficiaries.
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