I appreciate your answer. I'm stuck in another situation. What if the estate and trust distributed property to the beneficiaries? Should the beneficiaries also recognize capital gain in their Sch. K-1?
In brief, the trustee accidentally put property in its management company's QB (3 trust are the partners of this management company and they are the only partners), but the actual investors are the beneficiaries and not the management company. Accordingly, the accountant recognize this as property distribution to the beneficiary, but when I file 2014 1041, I did not enter the distribution (property distribution) since it was mistakenly entered in management QB. Was this a wrong tax treatement? Thank you for your answer!!
