I've followed this entire thread, and the answers seem to match what I've decided to do, but I have one big worry. Let me start by rephrasing the answers as I understand them..TT (online) flagged the missing 'total' and 'US source' gross income as missing, even though they did not appear on the K-1s. When I add my relevant (interest and total dividends) figures, I do match up with what the K-1 reports as net investment income on 14 E. Emphasis on 'NET' investment income.
For the foreign tax section, I entered the foreign taxes on 14 B and the GROSS foreign receipts when asked in the interview. Emphasis on 'GROSS' foreign income. The difference between GROSS foreign receipts and the foreign taxes is the net foreign income.
For me, there were four missing figures: the total GROSS income sourced at beneficiary (I may have the language wrong), and the US share of same.
The answer in the thread, to this point, seems to be to take the 14 E figure as a total, deduct the foreign gross receipts and arrive at the US share.
My problem is: I'm comparing a GROSS foreign number with a NET total number. It seems to me that, instead, I should deduct the NET foreign figure from the total NET figure to arrive at the US share of the net figure. But how do I then get the US and total GROSS figures?
Well... I contacted the CPA that did the K-1 and obtained the trust tax return, which I've never, ever had to do in a prior year. From that, I could see that the expenses on the trust's returns were proportionally allocated by income type (not quite, but assume so for now). Therefore, since I can see how the foreign expenses relate to the foreign NET, I can apply the same ratio and effectively 'scale up' the remaining NET US portion to arrive at a US GROSS figure, and I can therefore also have the total GROSS figure.
That takes care of two of the missing figures.
TT online also wanted to know what the expenses for US and total are, since I only ever entered the foreign expenses. In the calculation above, to scale up the NET US and total figures to GROSS, I can also calculated the expenses which, in theory, were attributed to the US share. And I can add this figure to the known foreign expenses to arrive at total expenses.
My reluctance came when I had to enter these figures. I had already, in an earlier attempt to fix the problem, done as the answers above indicate: enter the total NET foreign figure as the total GROSS, and ditto for the US. Now, as I go to update it, I'm hesitating because I'm about to override the known NET figures with higher GROSS figures, and I'm afraid that TT online will somehow construe this to mean higher total K-1 income.
So, in a nutshell, I'm hung up on being advised to enter a NET figure where a GROSS figure is requested.
On the other hand, when calculating the allowable portion of a foreign tax credit, the higher US share means a lower overall foreign % of income, which means a lower allowable max foreign credit, so my putting the scaled-up GROSS figures in provides no advantage to the taxpayer. So, even if it's incorrect, I feel like I'm erring in favour of the IRS.
