Beneficiary's K-1

[tsuewalker]

I have a Beneficiary's K-1 from a trust. There is an amount on line 14I. I don't know what to do with it. There's no line 14I in m program. Thanks for your help.

[Koss]

"Other Information"

14I is a generic code for "other information." There should be an attachment or supplement with the Schedule K-1 that explains what it is.

If you don't have it, then either the beneficiary did not give it to you, or it was not included with the K-1 when it was sent to the beneficiary. You or the beneficiary may have to contact the trustee, or the tax pro who prepared the Form 1041.

BMK

[tsuewalker]

Beneficiary's K-1

The explanation on the form for 14I is.... suspended losses from passive activities of $1192 and AMT suspended losses from passive activities of $1192 for a total of $2384 which is the amt on 14I. I'm still not sure what to do with it. Thanks for your help.

[Burke]

Is this K-1 a final K-1? It will be marked at the top. Also, what did the passive loss stem from? If it was rental property that was distributed to the bene's, then the suspended loss passes through to the bene for their records only to be used when the property is sold. You do not do anything with it on this year's return, unless that property was sold in 2013.

[tsuewalker]

This is a final K-1 and it's for the sale of the client's deceased mother's home. Thanks for you help!

[Burke]

Was the deceased mother's home ever used as rental property? Did the trust sell the property (so it seems)?

[mastertaxguy]

MIght this be information a taxpayer would need to compute the new Medicare 3.8% tax on investment income?

[tsuewalker]

House was never used for rental. Deceased lived in it until dementia set in and she had to be moved to a nursing home where she lived until she died. The house was sold after she passed. I'm not sure about the 3.8% on investment income. Haven't come across anything pertaining to that this year. Thanks for everybody's help. I really appreciate it.

[Burke]

If that is the case, then I have no idea what the passive loss information pertains to. A sale of a personal residence of a deceased is not treated as passive income/loss. If it was sold at a loss, it is a long term capital loss which passed through to the beneficiary(ies) and should be shown in Final Year Deductions, Box 11of the K-1. And the bene would show that on her Schedule D, line 12. Also, you do not add the passive loss and the AMT loss together. They are the same loss, except for treatment on the tax return. Each goes in a different place for different calculations. It is possible the person who prepared the trust return did it incorrectly. To be sure, get clarification of this item.

[Koss]

Passive Losses

Maybe the trust had some other assets, such as an interest in a publicly traded partnership, that was generating passive losses.

What kind of income or loss appears on the K-1?

Is your software generating Form 8582?

For this kind of stuff, you absolutely cannot rely on the software to guide you. But sometimes it will give you a hint, or point you in the right direction...

BMK

[tsuewalker]

Here's what the K-1 has on it in its entirety. Box 11D $6639 and then 14I $2384. Since I only do 1040 returns, I wouldn't know if the K-1 was done incorrectly. I just have to assume that it's done correctly. Thanks for all your help.

[Burke]

This cannot be a K-1 "for the deceased mother's home" if it is showing the correct information. Code D, Box 11 is for an NOL carryover. A long-term capital loss would be Code C. Have the taxpayer get a copy of the 1041 to determine exactly what this is. Or contact the Fiduciary (info is on the K-1) to clarify before you proceed on this return.

[tsuewalker]

Burke, you were right! I kept questioning the client, telling her this could not be right. She called me this morning telling me she remembered her mother's house was a rent house for a couple of years. Those payments went to care for the mother while she was still living in the nursing home. That having been said, can the code D in box 11 be right now? How about the 14I amt of 2384 for suspended losses and amt suspended losses from passive activities (1192 for both). Thanks so much for your help.

[Burke]

Hard to say without seeing the 1041. BTW, are you sure this was a trust? Or an estate? What is shown on the K-1 under Entity Name? If it was only rented for "a couple of years," then it was her primary residence prior to that. The bene cannot use any passive loss if there is no gain to apply it to.

[tsuewalker]

K-1 is for a trust. It is called Jess & Kathryn R. Rov Living Trust. 1041 not available to look at, it's in another state. Obviously, I won't have to worry about this client having this K-1 again since it's a final but I'm learning for the next one I get like this. Am I understanding you right.....11D is a NOL carryover. Since there is no income to offset loss, you can't show the passive losses on the return. If so, what do you do with it? Anything? You have no clue how much I appreciate your help. I've spent more time trying to figure this K-1 out than I have on doing 5 returns.