But my understanding is that a traditional IRA Distribution is not Net Investment Income. A 8960 form was also generated and everything on it is 0 except Line 19a - Adjusted Gross Income which is -$100 and Line 19b - Highest Tax Bracket for Estates and Trusts which is $15,200. This Trust 1041 should be very simple because the only activity this year was the distribution from Inherited Traditional IRA which is passed through to the 3 Beneficiaries via K-1’s. The total amount distributed was $105,000, $35,000 to each of the 3 Beneficiaries but I made my example here simple in my initial post and rounded the $35,000 to $40,000. If you think both the E and H codes on line 14 is not a bug in the 1041 tax software than maybe it is a bug in the 1040 tax software because a warning message that they aren’t supported was displayed. Is form 8960 even needed and if I don’t include it and leave line 14 blank will it raise any flags to the IRS? Thanks!
