Do you know what the ordinary income really is, like perhaps a 1099-R distribution?

Without the box 14H adjustment, all of the ordinary income from the trust APPEARS to be net investment income, and if it is 1099-R income, it is NOT NII.

Line 1 is still ordinary income, but it is not to be treated as NII on the beneficiary's 1040.

(Sounds like something I would do, and I did, just this past season!)

My trust received an annuity distribution and terminated, distributing everything to beneficiaries. Since all trust K-1 income appears as NII on the 1040, BUT IT SHOULDN'T since it's not all NII, box 14H was used.

FYI, of course, interest, dividends and capital gains are NII coming from the trust, the other income doesn't get 14H adjustment.

It needs to show up on line 7 of the 8960 worksheet and line 7 of the 8960.