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Jojo94404
Level 3
September 6, 2026
Question

Fiduciary Tax Return (1041)

  • September 6, 2026
  • 2 replies
  • 25 views

Is there an option buried somewhere within the program that forces the tax-exempt income to handle expenses using the pro-rata allocation method?? 

2 replies

IntuitKatie
IntuitKatieModerator
Moderator
September 7, 2026

Hi great to see you in the Community and thanks for posting! Here are two support articles that should help with this:

To set pro-rata as the method used for all returns, go to Settings > Options > Tax Return tab > K-1 Distribution Options, and select Pro-rata allocation in the K-1 Deductions dropdown. To set it for a specific client only, go to Screen 44, Deduction Allocation for DNI, and enter 2 in the field Automatic allocation: 1=tier, 2=pro-rata [O].

If you need further assistance with this we would reach out to Lacerte Support.

George4Tacks
George4Tacks
Level 15
September 7, 2026

I don’t believe there is. You should account for those expenses related to the tax-exempt income. Some may then need to be input in a pro-rata basis. 

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