On the 1041 the gain is shown as long-term and as undistributed trust income and is included with the trust's taxable income. When given the option, I chose to not distribute the gain to the beneficiaries yet the gain appears on the k-1 worksheet and as short-term. The strange thing is that the final amount distributed to beneficiaries is correct but the worksheets don't make sense, at least to me. I wouldn't think undistributed capital gains should show up on a K-1. I guess I should become a CPA before trying to do a trust return.
