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BrooklynCarol
April 3, 2023
Question

How to enter a charitable deduction from a Pooled Income Fund

  • April 3, 2023
  • 1 reply
  • 0 views

I received a Sched K-1 Form 1041 from the Pooled Income Trust with the 2022 income, which I entered into my tax return.  I also received the amount I can take a a charitable deduction based on the stock I transferred into the Trust. However I have no idea where in the 1040 form I would enter this deduction. Anyone know how to do this?

    1 reply

    C
    Cynthiad66
    April 4, 2023

    This amount will not pull to Schedule A (Form 1040). Instead, a manual entry must be made on the Schedule A Gifts to Charity Menu, subject to the 30% AGI limitation on such contributions.

     

    You will have to itemize your deductions on Schedule A to be able to claim this deduction.

     

    A pooled income fund has the charity as both the trustee and the charitable beneficiary. The donor will donate property specifying that the income from the property will go to himself and/or other person(s). Upon their death, the corpus will be distributed to the charity. 

     

    It's called a pooled income fund because the charity will "pool" the donations from a number of different donors into one fund. This avoids the expenses of maintaining different trusts, as the charity is usually the trust creator. The trust must distribute all of the income currently, not just a set amount or percentage. If the pooled income fund doesn't distribute all of its income, then the excess will be taxed at the regular trust tax rates.

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    B
    BrooklynCarolAuthor
    April 5, 2023

    Your answer makes sense and corresponds to what my financial advisor told me.

    However I'm having problems entering it into Turbo Tax in Sched A. When I simply add it in as a stock donation it deducts 100% which is wrong.

    There are two areas that I think I can fix this.

    1) The first screen asks if I have "attached conditions" or give "others rights" to the donation.

    2) There is another screen that asks if this is a 30% charity.  (not 30% AGI)

    I'm not sure if either of these apply?

     

    Also is the name of the charity my name or is it the institution's Legacy Trust Fund?

    C
    Cynthiad66
    April 5, 2023

    The name of the charity is Legacy Trust Fund.

    Use your second option for reporting the charity "This is a 30% charity"

     

    @BrooklynCarol

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