Form 1041 K-1 Final Trust activity

[notataxfan1]

Hello, I have a final trust 1041/K-1 with a whopping $28 on box 11A and it's also listed in box 14B, that is all the activity.  The "Excess Deduction Detail (Line 11) attachment says 'Section 67(E) Expenses (Used in arriving at AGI) Fiduciary Fees $28 and then "Excess Deductions Allocable to Net Investment Income $28 (See Form 8960 Instructions).  Of course we already filed, so I was going to amend if I can figure out how to easily (key word "EASILY") run this through.  14B says "foreign income" on the code def box.  And I have no idea what form 8960 is.  What the heck do I do with this?  I entered the amount and skipped as many boxes as I could.  Also have state of Md return.  Any "step by step" help would be appreciated.  THANK YOU!

[tagteam · Accepted solution]

I am not going to advocate for you not to enter the information from this K-1, but it is entirely possible that doing so is not necessary.

The $28 figure on Line 11A of your K-1 effectively reduces your adjusted gross income (by that "whopping" $28).

The $28 figure on Line 14 (H Code) is entered on Form 8960, which is the computational form for the NIIT (net investment income tax) and you are very likely not subject to the NIIT.

See https://www.irs.gov/instructions/i8960#en_US_2022_publink10003529

U.S. citizens and residents.

Individuals who have for the tax year (a) MAGI that’s over an applicable threshold amount, and (b) net investment income, must pay 3.8% of the smaller of (a) or (b) as their NIIT.

The applicable threshold amount is based on your filing status.

• Married Filing Jointly or Qualifying Widow(er) is $250,000.

• Married Filing Separately is $125,000.

• Single or Head of Household is $200,000.

[notataxfan1]

Thanks so much for the response.  Sorry, I should have said box 14B says "Foreign Taxes."  I guess I thought box 14 was just giving more info on the amount in box 11, which is a deduction?

[tagteam]

Yes, Line 11A would be a deduction (although at $28 it probably won't make much of a difference in your tax liability).

[notataxfan1]

When I entered the box 11A and 14B from the 1041 K-1, 11A seems to be properly reducing AGI by $28, while 14B is increasing the itemized deductions by $28 (schedule A line 6, other taxes paid), does that sound like the right result? It felt duplicative.

The $28 I guess from box 14B did roll to the 8960 worksheet but due to being so small had no impact as expected.  Thank you!

[PatriciaV]

Yes, you are correct. Box 14 Code B provides more information about the excess expenses given for Box 11A (foreign taxes). This is not duplication. The additional information flows to the Foreign Tax Info (Line 9) at the bottom of the K-1 Trust worksheet.

Note that the amount from Line 11A flows to Schedule 1 Line 24k and is reported on Form 1040 Line 10.