Question

Foreign income allocated to a foreign tax credit carryover from a K-1

Forum|Forum|3 years ago
April 14, 2023
2 replies
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I have a residual trust that provided a K-1 (Form 1041) for my taxes. This year (final year) it generated a Foreign tax credit carryover distributed (minimum tax basis) of $2325 that is not included on the Schedule K-1, Line 14, Code B..

• I do not itemize (take standard deduction), so prefer to take or carry the credit

• Do I simply add the $2325 to my existing Foreign tax credit carryover?

• Since the K-1 info provides no amount of foreign income allocated to the $2325 tax…is there any means to estimate a foreign income amount (usually entered on form 1116, Part I, line 1a…RIC) ? Possibly a general RIC tax rate ? or am I limited to entering no income correlated to the $2325 foreign tax?

DaveF1006

Yes, if you are certain you have this carryover, you may add this to your existing foreign tax carryover. The only information I have found regarding a RIC tax rate is found here. It mentions that an RIC is subject to tax at the regular corporate income tax rate (21 percent) on its investment company taxable income

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T

tgfirstAuthor

Not certain (that's why the question)... again it is not listed on the K-1, Line 14, Code B, but is listed on an info sheet with the K-1 as "Foreign Tax Credit Carryover Distributed (Minimum Tax Basis). 2,325. (Not Included on Sched K-1, Line 14, Code B)".....

2022 is the final year of the trust, and the K-1 does have a final year deduction (Box 11, code A) of $800.

The 2019, 2020, and 2021 Trust fiduciary returns (1041's) seem to have been able to take the full Foreign Tax Credit for taxes paid each year (with extra margin, but show no carryovers), so I'm assuming the $2325 FTC is from 2022 (current year), and should be used by beneficiary in this final 2022 year.

Just looking for guidance on carrying or itemizing the carryover, and if there is any gross income input associated with it (or enter no associated income with it on 1116).