@tagteam , I have a question about this topic. I have a trust that also distributed more than its DNI for 2017. I also had this situation two years ago, when a CPA did my return. The CPA didn't put the excess distribution into Tier 2. She just put the entire DNI into Tier 1 and said any excess didn't matter. I guess effectively she's right: It didn't matter because the sole beneficiary of the trust received a K-1 containing the DNI, and the trust paid $0 taxes, which would have been true either way. But I still like to get everything correct. Can you please confirm that the excess distribution should actually be a Tier 2 distribution? The other interesting thing to note is that in previous years, during error check, TurboTax Business for federal flagged this situation, saying "Since this is a complex trust, and total distributions are more than accounting income, you need to prepare schedule J." This year (2017) it doesn't do that. However, TurboTax Business for California continues to flag this situation in this manner.
