topic Trust Distributable Income in Get your taxes done using TurboTax

Trust Distributable Income

Bozodclown — Mon, 09 Mar 2026 09:20:56 GMT

I'm curious why a capital gain that's long-term because it was inherited and is retained by the trust, appears in the K-1 worksheet and the K-1s as a short-term gain. As an ignorant amateur I wouldn't think it should appear at all since it isn't being distributed and why would it be identified as short-term? I'm using TT Business.

Re: Trust Distributable Income

Anonymous_ — Wed, 02 Mar 2022 05:42:54 GMT

There must be an input error somewhere.

Capital assets acquired by the trust from the decedent are considered to be held long-term.

Re: Trust Distributable Income

Bozodclown — Wed, 02 Mar 2022 06:15:24 GMT

On the 1041 the gain is shown as long-term and as undistributed trust income and is included with the trust's taxable income. When given the option, I chose to not distribute the gain to the beneficiaries yet the gain appears on the k-1 worksheet and as short-term. The strange thing is that the final amount distributed to beneficiaries is correct but the worksheets don't make sense, at least to me. I wouldn't think undistributed capital gains should show up on a K-1. I guess I should become a CPA before trying to do a trust return.

Re: Trust Distributable Income

Mike9241 — Wed, 02 Mar 2022 09:32:16 GMT

the date acquired to use for property that the decedent owned on the date of death should be "inherited" this will force long-term.

Re: Trust Distributable Income

Bozodclown — Wed, 02 Mar 2022 10:20:57 GMT

I found the problem. I had first chosen to allocate capital gains to beneficiaries and then later changed that to retain the capital gains in the trust. I discovered that Turbotax didn't change Schedule D to show the gain going to the trust. It was showing short-term gains going to the beneficiaries. When I corrected Schedule D, the DNI worksheet and K-1 worksheet were corrected. Now there are no capital gains showing on the K-1s as it should be with the gains being retained by the trust. More fun.

Re: Trust Distributable Income

Anonymous_ — Wed, 02 Mar 2022 14:27:49 GMT

That sounds about right; you have to be careful not to allocate gain to the beneficiaries (and to income) in the program.