Trust K-1 with Item 5, non-business income of $24,370

[lovetaxes]

Entering data from a K-1 Trust, with $24,370 non-business income reported on Line 5. There is another entry of $-24,369 on Line 14H. If entered properly, would the 14H offset the income to report from Line 5?

I'm finding it difficult, whereas I've been advised that none of the other beneficiaries to this Trust are reporting the Line 5 income.

I don't want to make an error simply because I followed their lead. Any assistance on this would be greatly appreciated, as always.

Bob

[sjrcpa]

14H reduces investment income for the net investment income tax; not for regular income tax.

"I've been advised that none of the other beneficiaries to this Trust are reporting the Line 5 income" I'd take that with a few grains of salt. Line 5 income is taxable.

[qbteachmt]

Here is a Help article:

https://proconnect.intuit.com/community/fiduciary/help/entering-box-14-code-h-adjustment-for-section...

[lovetaxes]

Many thanks for taking the time to respond to my question. I am in agreement that if this is so, what effect, if any, does the Line 14h on Form K-1 have on the individual tax return? If it has no effect, can I simply leave that figure out.

Sorry to take advantage of your goodwill, but I'm old and need your kind assistance. (I'm really old")

[sjrcpa · Accepted solution]

14H affects the Net Investment Income Tax computation on Form 8960 only. It affects nothing else on the 1040.

[lovetaxes]

Thanks so much for taking the time to respond to my SOS. Your information, re: Form 8960 was quite helpful, for I seldom need to look for forms within the Lacerte inventory, that aren't automatically showing up.

My only follow-up question, should you have a moment, would be to know IF the K-1 L5 income is wiped out by the L-14h similar amount, shown as a negative. I tried several ways to enter the data but Form 1040 as additional income without consideration of the L-14h negative figure.

Huge $$ difference to the client so I don't want to make a "maybe" judgement. If you have the answer I would gladly accept it. 

BTW, the other beneficiaries had filed their returns prior to the K-1 being sent out. That is the reason they hadn't claimed the Line 5 income. With your assistance I might be able to pass the information on to them, this final week of tax season.

Sincerely, Bob

[lovetaxes]

Hello again ex-AllStar,

I now get it and will complete this return using your information. This should also help the other beneficiaries who will need to file amended tax returns to include the K-1.

The only advice that I count on this year is from the Lacerte Community. You are very kind to give your time and knowledge to others and I'm very grateful.

Enjoy the rest of the weekend and the final days of "individual" tax returns.

Bob (lovetaxes)

[lovetaxes]

I want to thank you for taking time from your weekend to respond to my question related to Form 8960. I was able to follow your advice, along with another member of the community. Both of you made it possible for me to complete a tax return which included Trust income, etc., without further frustration with Form 1041, Line 14h.

Other beneficiaries from this same Trust had evidently filed there respective returns BEFORE the K-1 was mailed out to them. Through my client they will be able to duplicate the treatment of that same line item and we can all live happily ever-aver. Unless of course, another issue raises it's head.

Enjoy the upcoming season and know that there are a lot of us that have questions and consider you and other members of the "Community" as our first line to go to for answers. There is no second line!

Bob

[Summit1]

I posted a question about a 1041 I was working on yesterday and did not give you sufficient information to provide an answer. Maybe this will help you help me. 

Taxpayer passed in June 2020. Family received an Estate tax # and there are (4) beneficiaries all with 25% share. The only asset remaining was the deceased home which sold in 11/2020. Proceeds were $95,000.00 and had no mortgage. The executor (who is one of the beneficiaries) issued checks to each for $23,750.00. I recorded the $95,000.00 on 1041 Line 8. I recorded the distribution on Schedule B, Line 9. This carried to the K-1's on Part III, Line 5 and Part III, Line 10. I prepare taxes for one of the beneficiaries and when I added the K-1 to their return in recorded the Income on Schd E Line 37 and then to the 1040 Schedule 1, Line 5. the amount on K-1 Line 10 was carried to Schd A, Line 16 (Other Itemized Deductions. This nets out to zero but another question I have is why it does this if the Estate Exemption is over 11 million. When I added the K-1 to this taxpayers return it took them from Std. Deduction to Itemized and raised their income. This caused them to lose the balance of their 2nd stimulus and it lowered their overpayment by almost $2000.00. Am I missing something?

The only thing left to distribute will be a small amount of money that is being left in the Estate Account to pay the final attorney's fees.

[BobKamman]

The sale of the home goes on Schedule D, which then carries over to Line 4 of the Form 1041 -- probably as a loss, after selling expenses (if there was no personal use of it before the sale).  

[qbteachmt]

@Summit1 

You own topic is at this link:

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/how-do-i-treat-income-a...

Instead of updating this other person's topic, you should be updating Your Own. The more details you give to your own topic, the more likely you get your answer from the peer users that volunteer here.

I will mark your original topic to be deleted.