The software forces you to take the $3000 of the loss at the trust level which reduces ordinary income in the trust. However, all income has been passed to the beneficiary so the deduction for the distribution takes ordinary income to zero. So the trust ends up with a -3100 loss and no tax. Checking the K-1 the beneficiary does not get a reduxed ordinary income but pay tax on the amount before the reduction. So the $3000 loss is wasted in the trust. I it was not claimed, the truat tax would still be zero. This does not seem right!
