Why doesn't the 1041 program consider the tax benefit rule for state tax refunds? If a trust was limited to a $10,000 state tax deduction in 2018, why should it then report the refund as income in 2019?
It shouldn't, but it is not programmed like the 1040.
Do it manually; enter the refund as income, then back it out "As per Rev. Rul. 79-15, no tax benefit."
You can see I'm old since I have been doing this since 1982, and I still remember RR 79-15.
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