What line item does a complex trust's schedule F income go on a K-1?

[asemco1616]

Currently, the K-1 reflects the complex trust's total distribution amount to each beneficiary on line 5 (Other portfolio and nonbusiness income). In addition, it reports their share of the trust's gross schedule F income on line 14 - Other Information. Shouldn't the K-1 reflect only their share of gross income or distribution under ordinary business income? Even though I did not distribute all current income, can I make this a simple trust by reporting each's share of ordinary business income on the K-1? All beneficiaries would agree to this.

[tagteam · Accepted solution]

" Even though I did not distribute all current income, can I make this a simple trust...?"

It does not matter whether or not you actually distributed all current income; the only issue is whether or not the trust instrument requires that all income be distributed currently. If the latter applies, there are no charitable amounts paid or set aside, and the trust did not distribute amounts allocated to corpus, then the trust is a "simple trust". 

See https://www.irs.gov/instructions/i1041/ch02.html#d0e2328

Regarding ordinary business income on K-1s, you might want to read through the following ABA comment on material participation as it applies to trusts, fiduciaries, and beneficiaries. This is not an uncomplicated issue.

http://www.americanbar.org/content/dam/aba/administrative/taxation/policy/012015comments.authcheckda...