Colorado State Tax Error (Trust)

[Christopher00]

There appears to be an error in the Colorado State Tax (Business/State) edition when complex trusts distribute income and principle or have a charitable distribution.

The denominator for the calculations on the Colorado Sch K-1 Line 1 is from form 1041, Schedule B, Line 7 (Distributable Net Income).

The numerator for the calculations on the Colorado Sch K-1 Line 1 is a proportion of Line 1 from form Colorado K-1 Worksheet which comes from 1041, Schedule B, Line 10 (Total Distribution).  This is the error.  This proportion should also be from form 1041, Schedule B, Line 7 (Distributable Net Income) per the Form 105 book and to maintain unity in the calculations in Schedule B.

The current implementation only works for simple trusts that only distribute up to the Distributable Net Income and do not make charitable contributions.

See Colorado Form 105, p3-4: Sch B subtotal percent should not be greater than 100% for a detailed example.

TurboTax Support:  Please correct this issue in TurboTax Business or explain where I am mistaken.

[tagteam]

You should contact Support (via the link below) directly.

What is the TurboTax phone number? (intuit.com)

[Christopher00]

I tried the phone number 4 times.  The person just says it sounds like a financial advisor needs to look at it.  Then sends me to a financial advisor who is not allowed to help with TurboTax Business.  The help line has been less than helpful for TurboTax Business.

[tagteam]

You might want to try again and request technical assistance (software programming) rather than making it out to be a tax issue. Support for tax issues (or advice) is not available for TurboTax Business, but support is provided for programming and data entry issues.

[Christopher00]

Tried calling the number again.  Worked through to someone for technical assistance and they are unable to support TurboTax Business Desktop version.  The support person went through the process of trying to troubleshoot TurboTax personal edition.  They tried saying it was a financial advisor again, and requested I restart the entry.

I have performed three different tax returns and I have characterized the issue.  The Colorado K-1 Worksheet is pulling the incorrect or insufficient information to properly handle a complex trust that has withdrawn both income and principle.

At this point, I would strongly recommend against purchasing or using TurboTax Business Desktop / Download version if TurboTax cannot provide support to correct identified issues in their program.

[JohnWS]

I have encountered the same issue and agree with the original poster's analysis. It appears that the value of Federal 1041, page 2,  line 11 is used instead of the DNI (line 7).  Line 11 can include non-income distributions (such as principal) that are not part of Federal or CO income.

This is a general error for complex trusts, but also will affect simple trusts when a final return is done and assets are distributed.

A similar (not quite same) error existed in 2020 returns where the total distribution number was used instead of DNI, but that error did not exhibit as a calculation error in the return.

How can this programming error get fixed?

[JohnWS]

Followup: I was able to get through today (3/29) (after at least 2 transfers) to a representative that was able to understand the problem and see that it has been reported by other users. This rep will forward the information to the responsible team. No promises on a time frame for a fix, however.

In my own case, I can work around the issue by setting Line 10 in form 1041 schedule B to zero, then calculating and printing the Colorado return (filed by postal mail), and then restoring the proper value on line 10 of schedule B on the 1041 form and re-calculating/reviewing for Federal e-filing.

[tagteam]

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@JohnWS wrote:

No promises on a time frame for a fix, however.

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Hopefully, the fix will not involve the cessation of offering the Colorado Fiduciary return.

It seems as if the list grows larger every year. At least count, I think there were roughly 30 states that TurboTax Business did not support (for fiduciary income tax returns).