topic Simple Trust distributions in Business & farm

Simple Trust distributions

bigdav160 — Mon, 13 Apr 2020 16:44:00 GMT

This has been an ongoing issue with TurboTax business and me for years so it's probably something simple that I am doing wrong. It's a irrevocable Simple Trust and designated as such. However, TurboTax allocates all the bank interest and stock dividends to the Trust. For example, this year the Trust earned $500 in interest, $7000 in dividends and $7,000 in capitol gains. The Trust income line 18 is $14,500. The K1 distributions line 18 amount is zero. The amounts on the K1 are zero. I do not know how to fix this.

Re: Simple Trust distributions

Anonymous_ — Mon, 13 Apr 2020 16:46:15 GMT

The 1041 module in TurboTax Business can be quirky.

You most likely just need to go through the Distributions section and actually make a distribution to the beneficiaries (even though you should not have to do so in the case of a simple trust).

Re: Simple Trust distributions

Anonymous — Mon, 13 Apr 2020 20:15:22 GMT

by the way in a simple trust capital gains are genearlly not distributed to benes just ordinary income. However since i can't see the trust document i can't say for sure however from IRS instructions for 1041

Simple Trust
A trust may qualify as a simple trust if:
1. The trust instrument requires that all income must be distributed currently;
2. The trust instrument doesn't provide that any amounts are to be paid, permanently set aside, or used for
charitable purposes; and
3. The trust doesn't distribute amounts allocated to the corpus of the trust.
capital gains are corpus. s if you been distributing them then you have a complex trust.

Re: Simple Trust distributions

Anonymous — Mon, 13 Apr 2020 20:18:54 GMT

I would also add that unless the trust document permits corpus distrubtions, if you been distributing them, you may want to consult a lawyer. bad things can happen to the trustee.

Re: Simple Trust distributions

WINSOME81 — Tue, 14 Apr 2020 18:42:50 GMT

i have credit shelter that files as a simple trust . I have distributions , federal tax deduction and state tax deduction. how do Where do I enter the federal tax deduction?

Re: Simple Trust distributions

WINSOME81 — Tue, 14 Apr 2020 18:46:51 GMT

I entered t he distribution amount in the section. what section does the for federal tax belong?

Re: Simple Trust distributions

WINSOME81 — Tue, 14 Apr 2020 18:50:33 GMT

the problem is thubmitted ti this is a Beneficially IRA . The Tax was submitted to the IRS and heas returned. how?

Re: Simple Trust distributions

WINSOME81 — Tue, 14 Apr 2020 18:51:06 GMT

thanks

Re: Simple Trust distributions

bigdav160 — Wed, 15 Apr 2020 13:17:07 GMT

I went and changed the distribution scheme from percentages to the exact amount of interest/dividends and it made no change to the amount of tax the Trust owed or to the amount distributed (zero) on the K1. I guess I have to learn how to do this by hand. Not only is it a Simple trust, it's a simple trust with one bank account.

And yes, I know the difference between the Simple and Complex Trust. I am not trying to distribute capitol gains only interest and dividend income.

Instead of double taxation this year I'll send the IRS a check with an extension so I can figure out what is going on here.

Thanks

Re: Simple Trust distributions

Anonymous_ — Wed, 15 Apr 2020 14:05:07 GMT

@bigdav160 Enter Forms Mode, open one of your K-1s, and ensure that there is a percentage in Part B of the Beneficiary's Allocation Smart Worksheet.

Re: Simple Trust distributions

bigdav160 — Wed, 15 Apr 2020 18:23:07 GMT

Thanks tagteam but the percentages are there on the form.

Just under that (part 3) should those lines be blank?

Should the K-1 Worksheet be blank? Form - Distributable Income for Schedule K-1 does show amounts in line 1 and 2. It's part 2 of that form where the amounts get zeroed out and I am not sure what all those numbers represent. I would guess the answer to my question is in there.

Re: Simple Trust distributions

Anonymous_ — Wed, 15 Apr 2020 19:31:33 GMT

@bigdav160 wrote:
Just under that (part 3) should those lines be blank?

No, Part III should not be blank if you distributed interest and dividend income to the beneficiaries.

Frankly, I am not certain as to precisely what is occurring in your case, but the income should be flowing through to your K-1s if you made a distribution in the program.