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Schedule D income flowing to Trust instead of Beneficiary Income creating tax liability

Forum|Forum|6 years ago
March 8, 2020
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My mother’s trust (filing 1041) has capital gains on Schedule D. 100% of the income is required to be distributed to the beneficiary. But turbotax is showing the gains as "Trust" income on Schedule D, III, line 17 instead of “Beneficiary” Income. This is creating a tax liability for the trust instead of flowing through to beneficiary on the K-1. I’ve told the program that 100% of the income is distributed to the one beneficiary, but that does not seem to register. This is the first time I have done this return using TurboTax. I’ve always paid a fortune in the past to take it to a tax preparer….May have to do that again this year.

TurboTax Business Windows

Best answer by Anonymous_

In the Investment Income section, you need to click the Start (or Update) button to the right of Allocation of Capital Gains (Loss).

You will have to allocate gain (long-term and/or short-term) to your beneficiary(ies) and also allocate the gain to income. Subsequently, you will be able to distribute the gain, which will appear on the K-1s.

A

Anonymous_Answer

Employee

In the Investment Income section, you need to click the Start (or Update) button to the right of Allocation of Capital Gains (Loss).

You will have to allocate gain (long-term and/or short-term) to your beneficiary(ies) and also allocate the gain to income. Subsequently, you will be able to distribute the gain, which will appear on the K-1s.