Retirement tax questions

The program is handling the scenario correctly, since distributions carry through DNI (distributable net income) through to the beneficiaries. On the other hand, distributions of principal (corpus or trust assets) are not shown on K-1s.

If you absolutely want the trust to pay the tax on the income and it is a small amount, then you will have to indicate that distributions were not made (the trust will wind up paying the tax and, frankly, no one will have a problem with that considering the compressed tax rates that apply to trusts and estates).

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