Avoid tax on 1041 since beneficiary should pay it

[jgs1947]

I know that the distribution is not taxable to me, the fiduciary, but am unclear how to make my 1041 show that.

[dmertz]

Distributable Net Income is shown on Schedule B and on the beneficiaries' Schedules K-1.  The estate or trust receives a income distribution deduction calculated on line 15 of Schedule B.  To be treated as DIN, you must enter the beneficiary information into TurboTax Business.

[jgs1947]

I did finally find the small question that clarifies 100% going to beneficiary.  I now have a question about showing a loss on line 23.   It really isn't a loss, because it is the final return for this trust with the balance being held going to the beneficiary.  I find it odd that this amount is showing up as income (or a loss) since it has been held in trust for 20 years.  The only part that is income is the capital gains/losses on the initial investment.

The distribution is showing up on K-1 as Net short-term capital gain which is not accurate.  Did I do something wrong?

Anyway, I don't care that it shows a loss.  As I said, it is the final return for this trust.  I only care that the IRS accept it and that it is done correctly.

[dmertz]

-$600 is normal on line 23 when all income is passed through to beneficiaries.  The -$600 effectively comes from subtracting income distribution deduction and the $600 exemption from the otherwise taxable income.

Not knowing anything about the type of income being passed through the beneficiary(s), I can't say whether the income is from a short-term capital gain or not.