Capital Gains from sale of inherited farm

[trinkel]

When my father died (end of 2018) I inherited one-third of a farm in Kansas (I live in Minnesota) which he inherited from his father. Half was owned by him, half was held in trust.

We sold the farm last year. I know that I will owe tax (capital gains?) on the increase in value for the trust portion and have a K1 form for it. The guy handling the trust said we would need to pay the tax to Kansas. Do we also pay federal tax on it?

Also, is TurboTax Deluxe suitable for this or do I need Premier?

Thanks!

[Critter-3]

Yes you pay tax to the feds on everything no matter where it came from. 

If you use the ONLINE version you will need the Premier version ... if you use the Downloaded version then any of them will handle the K-1 form.

[trinkel]

Thanks for the speedy response! I didn't think it sounded right that we only paid it to Kansas.

[trinkel]

A followup question . . . 

TurboTax asked for the K-1 as a business expense. As an inheritance from a trust that we sold right away, should this go in as business income or will I be asked for it later as personal income?

[Critter-3]

To enter a K-1 go to 
Federal Taxes Tab ( Personal in the H&B versions )
Wages and Income
Choose Explore on my own or I'll choose what to work on  (if it comes up)
Then scroll way down to Business Items
 S-corps, Partnerships, and Trusts.  Schedules K-1, Q - Click the Start or Update button 

Be sure to pick the right kind of K-1. There are 3 kinds, 1041, 1065 & 1120S