I received a K-1 from my mother-in-law's estate. Box 11(B) in the K-1 refers to a statement at the end of the K-1 (numbers at the bottom of this post are fictitious but consistent).
In the Easy Step in Turbo Tax I put in a value of $50 in Box 11 (B) for excess deductions on termination.
I then get a notice that states "Your entry for Box 11B will require some follow-up." It states that I'll need to enter the amount(s) from the statement in the corresponding topic in Turbo Tax. I have no idea what to enter and where. The instructions are very vague. Can someone please provide detailed instructions based on the data I've provided below? Thank you!
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Box 11 - Excess Deductions on Termination
Total Income (form 1041, Line 9) : -$200
Plus: Capital Losses: $200
Less: Total Deductions (Form 1041, Line 16) $100
Deductions in Excess of Income: $100
Total Excess Deductions: $100
Beneficiary's Percentage: 50%
Excess Deductions on Termination: $50
All excess deductions are applicable to the net investment income tax
Box 11(B) Excess Deductions on Terminations - Non-miscellaneous Itemized Deductions
Interest Portion of Excess Deductions on Termination: $20
Taxes Portion of Excess Deductions on Termination: $30
Investment Property Taxes Portion of Taxes: $30
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It's really pretty simple. If this is the final return of the estate or trust, and there are excess deductions on termination that are non-miscellaneous itemized deductions reported to you as a beneficiary, you may deduct the excess deductions shown in box 11, code B, on the applicable line of Schedule A (Form 1040). Each excess deduction on termination of an estate or trust retains its separate character. If your percentage of the non-miscellaneous deductions you listed is 50%, then you would have a $10 interest deduction, a $15 Tax deduction, and a $15 Tax on Investment Property deduction. You enter these deductions in the Deductions & Credits section of TurboTax according to the nature of the deduction.
Thank you so much for your quick reply. I generally understand what you are saying but I can't find the appropriate place to put these deductions.
1. Interest deduction: On Schedule A and the Easy Step option I only see the ability to deduct mortgage interest and Investment interest. I'm not sure where this particular interest comes from. On the 1041 Line 10 that accompanied the K-1 it is just stated as "Interest". Where exactly do I put the $10? I don't know what category it falls to.
2. Investment property Tax deduction: Similar question for this one. Where exactly do I input this? on Schedule A and the Easy Step option I see the ability to designate "state and local real estate taxes" or "other taxes". I'm not sure where to put this either.
I really appreciate help in this. Thank you!