Form 1041 for Estate and NJ Form 1041 problem
I am completing an Estate Income Tax Return (first and final) for an NJ Estate using TurboTax Business. On the Federal Form 1041, let's say I have $47,000 capital gains, and I can deduct $5000 real estate tax on the Federal return (but not the NJ State one). On Schedule B,Income Distribution Deduction the Adjusted total income (Line 1) is $42,000. ($47K minus $5K). It seems like that should be the number on Line 9 Income to be distributed currently. But if I do that, this lower number carries through to NJ, Schedule B Line 48A, for Beneficiary's Distribution. But I am not permitted to deduct real etate taxes for the NJ Form 1041, so the Beneficiary's Distribution for NJ should be $47,000, not $42,000, right? Otherwise, it is $5K too low for NJ. Consequently, the NJ Form 1041 will show tax due, because the distribution is $5,000 less than it should be so it shows taxable income to the Estate, rather than passing through ALL the income to the Beneficiary. The only workaround I found in order to carry through the $47K Beneficiary distribution to NJ, was to input a $47K distribution for Federal, too, resulting in Line 9 being $47k instead of $42K. Having never done a Form 1041 before, I may simply not understand this? TurboTax forces me to choose a number for this, rather than calculating it automatically, so I am let uncertain about whether this is correct. Thank you.
