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How to enter K-1 (1041) information on a 990

Level 2

I’ve got a nonprofit client that was named a 50% beneficiary in a deceased individual’s will.  The succession assets were transferred to a charitable trust.  The Trust didn’t disperse any funds in 2019.  In March 2020 The Trust disbursed $200,000 and sent a letter to the nonprofit requesting that it provide a signed receipt of the donation as required by the IRS.  Then in September 2020 the Trust issued a 2019 K-1 (1041) to the nonprofit showing interest income, dividends, and long term capital gains totaling about $170,000.  Does the nonprofit treat the distribution from the Trust as a donation (like the initial letter indicates), or is the nonprofit required to report the income as UBIT in 2019 per the K-1 received?  If it is UBIT, where does the K-1 get entered in the Exempt Org module?

Thanks for the help!

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2 Comments 2
Level 15

If they got $200,000 they report that as a bequest (donation). The only thing reportable from the K-1 would be UBIT. Investment income such as you described-interest, divs & LTCG is not UBIT.

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Level 15

I'm a bit confused on the issue of will and trust. If the not-for-profit is in the will, who created a trust, what went into the trust, and why did the trust also pay out a donation? The will should state the assets that transfer directly to the organization as the bequest, or these assets were already in a trust?

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