If I enter $5,000 as allocable and $3,000 as attributable to income, Schedule D, line 18(a) allocates the entire $5,000 to the beneficiary and $0 to the trust, but the K-1 correctly shows $3,000 cap gain distributed. If I enter $3,000 allocable and $5,000 attributable, Sched D line 18(a) correctly allocates $3,000 to beneficiary, but the K-1 shows less than $3,000. I can't find any combination of the two numbers that allocates $3,000 to the beneficiary in both the Schedule D and the K-1. What should I enter?
I cannot seem to replicate your issue.
I entered $5,000 as LTCG with $3,000 allocated to income and to the beneficiary, then made a distribution of $3,000 to the beneficiary. Note that I also used percentages and that also appeared to be correct.
I have $3,000 allocated to the beneficiary and $2,000 allocated to the trust on Schedule D (18a).
Thanks for your quick response. Do I understand that on the Income tab under the headng Allocation of Capital Gains/Loss, in the subsequent page Allocation of Long Term Capital Gain you entered $3,000 and the next page Enter Gains Attibutable to Income you also entered $3,000? When I do that, the Schedule D is correct as you note in your test, but the K-1 has a lesser amount distributed to the beneficiary. Did you check the K-1? thanks again.
@taxbattler wrote:
Did you check the K-1?
Yes, I did check the K-1. In fact, I also did a test return with two K-1s and both were split evenly (50% each).
In both cases, the figures on the K-1s were correct; $3,000 for the first K-1 and then $1,500 each for the second set of test K-1s.
I am not sure what is happening in your case.
Thank you for trying this. I must have done something earlier in the return that is impacting my results. I'll redo my return.
A couple of years ago I struggled with TT Business to allocate capital gains to a beneficiary. The trust agreement allows that capital gains can be allocated to income and distributed to beneficiaries. You responded to my question then, but I continue to have problems with the situation. I believe the tests you ran back then on the software were successful because there was one source of income--capital gains. When I have dividends as a second source of income, the software doesn't product a correct answer. The following is a test that I have run:
I use $6,000 of dividends and $4,000 of capital gains, with a distribution of $8,000 to the beneficiary. I've tried every combination on the screens "Allocation of Long-Term Gain" and "Gains Attributable to Income," and either the Schedule D is correct or the K-1 is, but not both, as follows:
Allocation Gains Attributable Sched B DNI Sched D to beneficiary K-1
3,200 3,200 9,200 3,200 2,783
4,000 3,200 9,200 4,000 3,200
3,200 4,000 10,000 3,200 2,855
4,000 4,000 10,000 4,000 3,200
I believe the DNI should be $10,000 and the cap gain distribution to the beneficiary should be $3,200 (80% of the $4,000 cap gain) on both the Sched D and the K-1, but there is no combination that provides that answer. Can you help?