I posted an issue previously but I think the title was confusing.
I’m completing a Trust return that has income consisting of interest and capital gains and distributed all the income to the beneficiaries. The 1041 properly shows the income and distribution amounts bringing the trust income to zero, but the income that was distributed is not showing on the K-1, interest and net long term gain fields are blank on all four K-1’s. The only item reflected is a negative net investment income tax adjustment on line 14.
Looking at the Schedule D, Part 3 seems to be applying the Trust exemption amount ($100) in lines 18a-c to the beneficiaries (column 1) and the income to the Trust (column2) which seems to me those figures should be reversed.
If I manually change the amounts in Beneficiaries column 1 from $100 to match the amounts in Total column 3, the distributed income amount is then carried over to the K-1’s as I would expect and the net investment item is gone.
I guess I’m confused. As it stands, without any manual adjustment, neither the Trust nor the Beneficiaries are being taxed which doesn’t seem right. I did talk with one of TT tax experts yesterday and we walked through every step I completed on a screen share and he said it was right but couldn’t address the issue, although we did not look at the Schedule D which seems to be where my issue resides.
Is there an issue within TT or am I doing something incorrectly? Since I am not an expert here, I really don’t want to manually force an outcome.
Thanks.
