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AZ appears to follow UPIA (Unified Principle and Income Act although I'm not 100% sure. If yes how do I allocate 50% expenses to income and 50% to principle? And must I do that on the federal 1041 return as well?
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If it's an AZ Trust, the AZ rules apply to the federal return.
What software are you using?
The more I know the more I don’t know.
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Proseries Basic.
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I have ProSeries Basic 2023 for Individual returns and ProSeries 2023 for fiduciary returns.
(its not ProSeries Professional. I've never used that.
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First, it's Uniform. Second, it's Principal. Third, this is a legal question. Federal computation of DNI doesn't rely on state law, except perhaps when assigning capital gains to income or principal. Each case is based on its own facts and circumstances. Allocations are the decision of the trustee, not the preparer.
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Bob Kamman:
I love your response! Sorry about the errors - I do my best to get things right but clearly got those two words wrong when referring to the UPIA.
I'm glad to learn that: "federal computation of DNI doesn't rely on state law except perhaps when assigning capital gains to income or principal. Each case is based on its own facts and circumstances. Allocations are the decision of the trustee, not the preparer. "
In this case I am both preparer and a co-trustee, and given what I know about the trust I'm confident the capital gains (losses) don't need to be allocated to principal.
Thank you 🙂
