@pattypuzzled Depends. You indicated you sold some land that was in the Trust from a death. At the date of death, the land should have received a stepped up basis to the market value at the time of death. Make sure you have the correct basis for gain assigned to the land. This could reduce the amount of gain. If you had a capital loss carryover in the trust, this loss carryover should have netted against the capital gain from the sale of the land on the final 1041 return for the trust and the net gain/loss distributed out to the beneficiaries. Example: $20,000 capital loss carryover. $60,000 gain on the land sale, The net gain of $40,000 would be reflected on the K1 for each trust beneficiaries as capital gains. The amount of cash the beneficiaries receive is not considered all income, only the net gain. So if there is no capital gain or a capital loss after applying the carryover amount, that is what is reflected on the K1, regardless of the amount of cash they received. If there are any trailing attorney or trustee fees, makes sure these are also distributed out as excess deductions on the K1.
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