I have a Schedule K-1 from a trust that includes an entry in Box 14 with Code B (Foreign taxes) of $419. There is another entry in Box 14 with Code E (Net investment income) of $38,775. The $38,775 amount is the sum of amounts in Boxes 1, 2a and 5 on this Schedule K-1.
Turbotax prompts me to "Enter the following detail about the foreign income reported on your Schedule K-1." My problem is that there is no "foreign income" explicitly reported on the Schedule K-1. So where do I find the 3 items (below) called for in the interview? I do have a copy of the trust's tax return, with its Form 1116 and the general allocation percentages for each beneficiary.
First, I need "Gross Income Sourced at Beneficiary Level." I suppose this is the $38,775 amount reported in Box 14 with Code E.
Second, I need "Gross Income Sourced at Beneficiary Level: U.S. Source Income." For this number, I suppose I can take the amount on line 3e of the trust's Form 1116 ("Gross income from all sources"), subtract the amount on line 3d of the trust's Form 1116 ("Gross foreign source income"), and multiply the difference by the beneficiary's general allocation percentage (in this case, about 52%).
Third, I need "Gross Income Sourced at Beneficiary Level: Foreign Source Income." For this number, I suppose I can take the amount on line 3d of the trust's Form 1116 ("Gross foreign source income"), and multiply it by the beneficiary's general allocation percentage.
This seems like it makes some sense, except that I would expect item 1 to equal the sum of items 2 and 3. Is it a problem that they do not? Should item 1 NOT be the amount reported in Box 14 with Code E? Should I be looking elsewhere for the numbers to enter on this interview screen?
There is an extensive but meandering and confusing discussion of this topic here.
