Form 1041: Schedule B Line 3 problem

[lyle-gregory]

Form 1041: schedule B line 3 is showing a value when data source for this line is zero ( Schedule D line 19 column 1

Serious problem 

[Just-Lisa-Now-]

I cant replicate your situation, what number is it showing?  Can you trace that particular number back to where it came from?

[lyle-gregory]

The number for Form 1041, Schedule B, Line 3 is supposed to come from Schedule D, Line 19, Column 1 (Beneficiary Depreciation), as indicated on the form.  This I also the location the program jumps to when selecting QuickZoom.  Instead, the entry from Schedule D, Line 19, Column 3 (Total Depreciation) is entered on Form 1041, Schedule B, Line 3.

This is a serious problem that has already caused me to file erroneous returns before I discovered it.

[Just-Lisa-Now-]

Sch D, Line 19, Column 3 is total capital gain/loss not depreciation. 

Do you have figures in Column 2 and 3 or just 3?

Ive checked all 10 of the 1041s Ive prepared this year, I dont see any that have a dollar amount on Sch B line 3.

[lyle-gregory]

I checked all of the 1041s I have prepared.  The error does not occur when there is a total capital loss (which makes sense because a loss cannot be allocated to a beneficiary), or when there is no capital gain allocated to the beneficiary.  It only occurs when there is an amount of capital gain less than the total capital gain allocated to the beneficiary, in which case the program transfers the total capital gain rather than the amount allocated.

The default rule for trusts is that capital gain is not allocated to beneficiaries, but there are three exceptions in the Regs.  The program allocated over a half million in capital gain to a beneficiary on line 3 even though about $100k was specified on Sch D, and the beneficiary only received about $100k in distributions -- impossible!

[Just-Lisa-Now-]

I think youre going to have to call support for this one, its too in depth for me to sort out on a sample/dummy return.

[lyle-gregory]

Is there a way to alert Intuit to the problem.  I have solved it with overrides and superseded returns, but they need to fix it.  I am unaware of a way to submit trouble reports without calling.  I am not going to wait on the phone.  Thanks for your attention to this.

[IntuitKate]

Hi @lyle-gregory  The best way to document the issue is calling the Proseries Support so they can create a formal ticket and document it.  

They have the tools to determine if it’s a quick fix, a change in instructions, or a potential defect and whether it’s an issue  we’re already reviewing or a brand-new one we need to get reported.

Since this community is designed for peer-to-peer resource sharing, our technical team doesn't monitor these threads for troubleshooting. 

[Samantha_at_Intuit]

Hi @lyle-gregory , please see the screenshot below from the Form 1041 instructions for Schedule B, Line 3. Also refer to the cross-reference for Schedule B, Line 3 in the ProSeries program. Consistent with the government instructions, the program will enter the greater of the total net gain from Schedule D, Line 19, column (1), OR the amount entered in the field for all capital gains attributable to income whether or not distributed.

(added image)  

[Just-Lisa-Now-]

@Samantha_at_Intuit  when I click your link, it gives me an error.

[lyle-gregory]

Thank you for your reply.  The Form 1041 Instructions for line 3 are different than the instructions on line 3 that instruct to enter Schedule D line 19 column 1.  Nonetheless, enters the larger of Schedule D line 19, column 1 or column 3, it is making the assumption that all capital gains are allocated to income, which is not always the situation.  The Form 1041 Instructions for line 3 state that all capital gains should be entered on line 3 if "under the governing instrument all capital gains are attributable to income, then include 100% of the capital gains on line 3."  ProSeries needs a smart entry box requesting the "amount of capital gains attributable to income under the governing instrument", so that figure will be entered on line 3 if it is less than all capital gains.

[sjrcpa]

Almost always capital gains are corpus. Maybe the software defaults to that. 

Is there input for Accounting Income where you can indicate what portion of capital gain is income?

(I don't use ProSeries)

[Just-Lisa-Now-]

PS defaults to corpus, you have to manually change it, and remove it from the line that he already says is blank.

Right clicking and using Cross Reference on the line where the amount appears that it shouldn't is the only other thing I can think of, maybe its pulling it from some other place, I dont know, I cant replicate it.

[sjrcpa]

Is there a capital loss carryover from last year?

[Samantha_at_Intuit · Accepted solution]

@lyle-gregory ProSeries does not enter the larger of Schedule D, Line 19, Column 1 or Column 3. As shown in the cross-reference for Schedule B, Line 3, the program enters the larger of Schedule D, Line 19, Column 1 -OR- the amount from the user-enterable field below Schedule D, Line 19, Column 3 that states "Enter all capital gains attributable to income whether or not distributed...". Please see screenshot below for further clarification.