My father's trust holds mutual funds that have REIT holdings. On the trust's 1099-DIV there is ~$850 in box 5 (Section 199A dividends), which I presume is REIT dividends. I have filled out TT business (including putting the ~850 in box 5 under the 1099-DIV section), but in the K1 worksheet (Amounts to Allocate to Schedule K-1 Worksheet) there is nothing listed in 14-I. I would have expected some of the REIT dividends to flow there. FYI, I do not expect the full amount to flow there as the trust did not distribute all accounting income (the trust paid taxes on a property, which reduced it's income, and it had capital loss carryover). As a comparison the foreign tax paid on the K1 is about 92% o that listed on the trusts 1099-DIV box 7 (Foreign Tax Paid).
That leads into a second question. I can use a 663(b) election to distribute the full accounting income, but by distributing slightly less the trust still owes no tax and the beneficiary has less dividend income to owe tax on. Am I required to distribute the full accounting income? In the trust documents the trustee is required to distribute the "net income" of the trust.
Thanks!
