I am using TurboTax for Business 2022 to file a final return on a Complex Trust from my deceased parents for benefit of my son. In 2022 he used the full proceeds of the trust to buy a house. I am not aware of any special circumstances due to the house purchase. My question pertains to the topic of the distributions.
The trust contained long term assets which had large gains on them. I did the taxes initially by answering No to the question "Did the trust make any distributions to its beneficiaries in 2022". Since the assets had grown considerably there was approximately 40000 in capital gains which led to a federal income tax of in excess of 12000.
Going back later to review the return I changed this answer to Yes, since all the money was disbursed 100% to the sole beneficiary. Everything else on the second return was entered the same. This one change had a huge impact. It reduced the tax due to zero!
The screenshot below shows what I think are the pertainent values. The New Values column is what happened when I entered Yes for distributions, and the Old Values column is when distributions were set to No. Since this one change had a large impact, I am looking for some opinions on whether I have entered things correctly or not. Thanks in advance.
