Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Level 4
posted Jun 3, 2019 10:12:25 AM

How to enter trust capital gains allocation to beneficiary

For a trust, do I input any capital gains that I allocate to income to a beneficiary as a first tier distribution? The trust document and state law allows the trustee to decide how to allocate between income and principal.

0 6 4278
1 Best answer
Level 15
Jun 3, 2019 10:12:26 AM

"For a trust, do I input any capital gains that I allocate to income to a beneficiary as a first tier distribution?"

No, because according to the facts you previously set forth you, as trustee, have the discretion as to whether or not to make distributions of capital gains to a beneficiary.

Firs tier distributions only include income that is required to be distributed currently, whether distributed or not.

See https://www.irs.gov/instructions/i1041#idm139674712043984

6 Replies
Level 15
Jun 3, 2019 10:12:26 AM

"For a trust, do I input any capital gains that I allocate to income to a beneficiary as a first tier distribution?"

No, because according to the facts you previously set forth you, as trustee, have the discretion as to whether or not to make distributions of capital gains to a beneficiary.

Firs tier distributions only include income that is required to be distributed currently, whether distributed or not.

See https://www.irs.gov/instructions/i1041#idm139674712043984

Level 4
Jun 3, 2019 10:12:27 AM

So if the capital gains distribution is made then it goes under second tier? Does it get carried out as DNI that way?

Level 15
Jun 3, 2019 10:12:29 AM

Yes, on both counts.

New Member
Feb 17, 2020 7:47:20 AM

For 2019, I distributed dividends, interest, farm income and capital gains to a beneficiary. Only the first three forms of income are appearing in the k-1. How do I get the capital gains to appear on the beneficiary's k-1 as well?

Level 15
Feb 17, 2020 7:53:14 AM

@LizzyG1 You need to allocate the gains to income and then distribute those gains to the beneficiary (see screenshots) and note that you need the authority to do so.

 

New Member
Feb 17, 2020 8:24:47 AM

You could not be more amazing--thank you so much!