1041 Schedule K-1

[TB12]

I've read some of the previous posts on 1041 beneficiary distributions and they have been helpful. However, I still have a question on a cash distribution made to the beneficiary of a trust. This trust does not require that current income be distributed - the purpose of the trust is for the principal to grow and be used for higher education expense. No specific amounts are indicated. During 2009, $10,000 was "distributed" to the beneficiary - mutual funds were sold to obtain the cash. My question is, "Where does this go on the Schedule K-1?" Current income is only $311 in interest and dividends which is more than offset by a large capital loss caused by the sale of the mututal funds - total income on line 9 is $(2,689). For all previous years, taxes have been paid via the trust - nothing was distributed to the beneficiary (there's only one beneficiary). Can anyone help? Thanks!!

[JCH]

This sounds like a complex trust. There probably isn't a K-1 going to the beneficiary. See page 2 of Form 1041 and there's a line for distributions.

[TB12]

That ease?

Thanks for your response. You're right, it is a complex trust. I have filled out Schedule B on page 2 of Form 1041, but didn't think it could be that easy as far as the distribution is concerned. I keep thinking, "This is the IRS, I must be missing something!"

[taxxcpa]

K-1

This sounds like a complex trust. There probably isn't a K-1 going to the beneficiary. See page 2 of Form 1041 and there's a line for distributions.

I have one like that and my program generates a K-1 with nothing on it. I e-file the return with no problem.

[Burke]

There is no taxable income to pass thru on the K-1 since you have a negative income on the trust as a whole. (i.e, int and div less cap loss = ($2,689) It means the bene got a distribution from the corpus of the trust. Whether he/she should have or not is the trustee's problem. The excess loss is kept by the trust and does not pass thru to the bene until termination of the trust, if there is any left. It can be used next year to offset gains.

[TB12]

Thank you!

Thank you all for your help - much appreciated! Hope the remainder of the tax season goes well for you )