K1 errors - do I need to list cash distributions to beneficiaries from checking accounts?

[metchy]

TurboTax Business, filing estate return for deceased father. Distributed equal shares to each beneficiary from sale of house, and also made a final distribution of remaining assets left in the estate after paying bills -  mostly cash from his bank account. TurboTax didn't ask me to assign percentages but is telling me the beneficiary percentages don't equal 100%. When I look at the form view, there is no way to enter percentages. So I'm not sure if I'm supposed to enter the distributions from the house sale separately from the cash distributions from the bank account. |Am I? Why am I getting an error?

[tagteam · Accepted solution]

You can enter percentages in Forms Mode on the Beneficiary's Allocation Smart Worksheet.

[metchy]

I think there is a bug. If you use TaxAct or any other tax prep software, they ask for a list of beneficiaries and what percentage each is to receive. TurboTax business does NOT ask for this percentage in the step by step interview. Yes, I can go to the K1 form view and fill out the percentage, but why? I bought the software because I didn't want to fill out individual forms. I want to be interviewed, provide the information,and have the software populate the form data. If TT can't fill out this simple form, what else is it missing? How can I trust the tax forms it generates?

[tagteam]

I am not going to make excuses for the state of software (and am in no position as a volunteer to do so); it's functionality or lack thereof, is basically a matter of "it is what it is".

Regardless, you should know, as executor or the party responsible for preparing the return, what was distributed (or will be distributed within the 663(b) period) to each beneficiary.

[metchy]

Yep. Know these things. What I don't know is how to translate all that to the forms. So I buy software that is supposed to ask all the relevant questions and then populate the forms for me. Otherwise I would just get the form for free from the IRS and fill it out myself. I wouldn't buy software that makes me fill a form out directly without mentioning the need to do so. I assume that the software is asking me for all the info it needs, and filling out the forms with my answers, and letting me know if there is a discrepancy.

[SiliconWarrior]

Thank you for this answer/solve, @tagteam, because I'm having exactly the same problem (TurboTax is not inputting beneficiary percentages).  HOWEVER, how do I get to the Beneficiary's Allocation Smart Worksheet?  I entered Forms Mode, did a search for "Beneficiary's Allocation Smart Worksheet," but nothing came up?  Thank you!

[tagteam]

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@SiliconWarrior wrote:

......did a search for "Beneficiary's Allocation Smart Worksheet," but nothing came up?

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That worksheet is part of every K-1 in Forms Mode (i.e., it's not a separate form or worksheet).

[metchy]

You have to get on the step-by-step page where the software asks for beneficiaries. Then select Form View instead of step-by-step. You should now see the actual K-1 form and if you scroll down you will see a place where you can input what percentage they get. I don’t have access to the screen, sorry, I loaded the program onto a Windows machine just long enough to fill it out. But I might have had to go into each beneficiary’s form in Form View to enter the correct percentage. Then the error goes away. 

I confirmed this on the phone with TT support so maybe they will fix it. Or not. You just have to poke around in Form View and do it yourself. Then wonder what else is going to be wrong. 

[SiliconWarrior]

Thank you, @tagteam and @metchy !  I was successfully able to input beneficiary percentages using the Forms method.

I'm now encountering additional bugs.  The K-1's generated don't show the estate's capital gains; those fields are blank.  Additionally, at one point today, the various beneficiary names/addresses/info were all replaced with identical names/addresses/info from one beneficiary!  This is the buggiest I've ever seen TurboTax...

[tagteam]

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@SiliconWarrior wrote:

The K-1's generated don't show the estate's capital gains; those fields are blank......

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Right, for that you need to allocate the capital gains to income and also allocate the gains to the beneficiaries, and finally make a distribution. 

[SiliconWarrior]

Hrmmmm, @tagteam ... I had entered zero for "capital gains attributable to income," as the estate's capital gains were all generated by the sale of a home -- I had assumed this was not considered "income."   Am I incorrect about this? 

[tagteam]

You're correct, but you have to allocate gains to income if you want to distribute them to the beneficiaries.

[SiliconWarrior]

Hello, @tagteam , I followed your advice and entered the dollar figure as a "Total Long-term Gain" for 2023, and that same dollar figure as "Capital Gains Attributable to Income" for 2023, yet the K-1's generated still reflect nothing, except for a number in Box 11A ("Final Year Deductions").  I certainly could edit the K-1's directly, but of course my concern is that the K-1's are like this because I've made some significant error in the 1041.  Is there some other reason why I'm not getting a number in the K-1's Box 4A, "Net long-term capital gain?"  THANK YOU.

[tagteam]

@SiliconWarrior 

You have to allocate the gains to the beneficiaries and to income and then make a distribution of the total. Don't forget to allocate both the short-term and long-term gains. 

[tagteam]

@SiliconWarrior 

Also, note that if this is the final return, the capital gains could be offset by deductions, in which case they would not appear on the K-1(s).

Further, if there are gains that should be passed through (greater than the deductions), then try entering the percentage for each beneficiary in Forms Mode on the Beneficiary Allocation Smart Worksheet.