I'm working on Form 1041 for a trust. The total ordinary dividends (the only income) is $2,000 more than qualified dividends. The capital loss (Line 4) is $3,000 so the total income (Line 9) shows ordinary dividends reduced by $3,000. We're paying out all taxable income to the beneficiary. In creating the K-1, since ordinary dividends have been reduced by $3,000, the resulting amount is greater than the qualified dividends. I'm assuming it's a problem if the K-1 reflects greater qualified dividends than ordinary dividends. How can I resolve this?
