What does "enter all capital gains attributable to income" mean

[dpetersgvq]

I'm filing taxes on a trust that had modest net long-term gains.  It is asking me to "enter all capital gains attributable to income whether or not distributed".  Is that 100% or 0%?

[tagteam · Accepted solution]

" Is that 100% or 0%?"

Do not enter a percentage in that screen; it is a dollar amount that you would enter. 

You should be able to determine whether capital gains are required to be distributed to the beneficiary(ies), are never distributed to the beneficiary(ies), of if you, as trustee, have discretion to distribute capital gains from the language in the trust instrument.

Typically, capital gains remain with the trust, are considered part of the corpus (trust assets), and the trust pays any income tax due on the gains, except in the final year of the trust when all assets are distributed.

In many instances, however, the trustee either has the discretion or is required to distribute capital gains to the beneficiary and you would enter the amount to be distributed in "capital gains attributable to income".

[ewz12]

If the estate distributed 1200 to the beneficiary, is that the income capital gains? 

[tagteam]

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@ewz12 wrote:

If the estate distributed 1200 to the beneficiary, is that the income capital gains? 

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Can you restate your question? What is the source of the proceeds that the estate distributed?

[ewz12]

The estate had income from dividends and barter and exchange. I am stuck on what amount to put in all capital gains attributable to income. Is it the amount distributed to the trustee?

Thank you

 

[tagteam]

Yes. If you had capital gains that were distributed to the beneficiary(ies), then those gains need to be allocated to income in the program.

[note that trustees do not receive distributions unless they are also beneficiaries]

[ewz12]

I meant beneficiary. Thanks so much.

[tccpg288]

I entered all of the capital gains in the field "Enter all capital gains attributable to income."

The trust is now getting hit with AMT.

Is this correct, can you confirm capital gains triggers AMT within a trust for 2021?

[tagteam]

@tccpg288 

Did you go through the Distributions section?