Ok I went back into the program and did it 2 ways: allocated all the qualified dividends to the beneficiaries and then allocated all of the qualified dividends to the trust. In both instances, the amounts on the K-1 forms were identical. So, clearly there must be a glitch in the program. Can you please try a hypothetical both ways to see if your K-1 changes? So you think it is because the IRS wants someone to pay taxes and if the trust has a negative taxable income it forces the beneficiaries to pay taxes?
