1041 SCH D PAGE 2 TAX COMPUTATION WRONG?

[rootesrooter]

I'm dealing with a complex trust. For the first time there's a distribution to a beneficiary.  The trust has roughly 200K in qualified dividends and 750K in capital gains, 150K in deductions.

With NO distributions entered, 100% of the the qualified dividends show up on D, page 2, Part V, line 23.  If I enter a specific cash distribution (Required or Other), the amount on Line 23 drops by over 9K for every 1K of ordinary distributions. By the time I reach the actual 20K distribution, Line 23 is zero. And taxes have increased by over 10K.

The same thing happens if I enter a % distribution.

I don't see how this can be correct.  Any clues??

[joshuabarksatlcs · Accepted solution]

I ran the numbers on lacerte.  Couldn't duplicate your problem.  Line 23 worked as expected.

Only suggestion:

Make sure software is updated. 

Call support, serve screen, or Send the client file to Lacerte.  Lacerte has been responding to my emails within a day.  I had a complex trust return problem on Monday.  Called Lacerte.  Wait time was less than 10 minutes.  Spent an hour (mostly on hold) and concluded it was a Lacerte shortcoming.

Good luck.  Please update the finding.  I have a few large Complex Trusts in the pipeline.

[rootesrooter]

Thank you for your reply.

I had overlooked the required allocation of qualified dividends on Line 2b of the 1041 between the beneficiary and the trust. With this trust's combo of high cap gains and qual divs, any amount of distributions produces a nasty tax bite.

Lacerte's phone support was able to help - sort of. While we discussed different solutions over half an hour, I also opened a competitor's website and found the answer in their help screens.