K-1 for form 1041--HELP!!!

[Super Mom]

I have a client that received a K-1 with box 1 interest income of 6,000 and box 12 says long term capital loss of -225.00 and box 14 tells what portion of box 1 is in US Series E Savings Bonds. My VERY limited knowledge on this subject is that there is an annual 12,000 gift tax exclusion. Would that apply here????

Also, I'm in NC, anything special I need to know about NC???

Thanks in advance for any help!!!!!!!

[gkaiseril]

Estate or Trust Not a Gift

This form is from an estate or trust and in general there is not Gift Tax involved with the items on this form. The K-1 is reporting to the beneficiary the amounts that are to be reported on there individual return as the estate or trust is distributing all taxable income and expenses, i.e. passing through the information, to the individuals and not paying any income tax on the estate or trust income by the estate or trust.

If your software supports the entry of the K1 forms enter the data using your software package. Many will go line by line. If it does not, box 1 interest goes on Schedule B line 1. The Box 12 capital gains is for use on the AMT, form 6251, and the associated code describes the type of gain, you should have another capital gain entry on line 3 or 4a-4c. The U.S. Savings bound interest in box 14 is needed for your state return as state do not tax U.S. Savings bond interest.

You should also check to make sure your software is transferring the detailed information as required.

You can download a copy the beneficiary 10401 Schedule K-1 with instructions.

http://www.irs.gov/pub/irs-pdf/f1041sk1.pdf

[Super Mom]

Thanks!

Thanks For The Info And The Link!!! Bless You!!!

[Super Mom]

Long Term Loss On Shed D?

When I Entered The Info To The K-1 In My Software, It Carried The Interest To Sched B Like You Said, But The Box 11 Long Term Loss Was Carried To Sched D And Shown On The 1040, Is That Right Since It's The Final K-1?

[gkaiseril]

Yes, if it is code "c" for line 11 per the instructions it is long term capital loss carryover, that is unused capital losses being distributed to the heirs, and as per the instructions page this goes to schedule D line 12 for the net long term gain or loss form teh pass through entities like an estate.