NY trust K-1 help pleez.

[joanmcq]

Client has 4 trust k-1s with mostly dividends and tax exempt interest. The detail page shows among other things a breakdown between NY muni interest and non NY (most is non NY) The NY fiduciary adjustment detail shows how the fiduciary adjustment was made; taking into account the muni income, allocated expenses, state income tax for additions, and US gov interest, allocated expenses, and state income tax refund for NY subtractions, which then lists a fiduciary adjustment (mostly positive). I've put these in 'other additions' on page 2.

But all the tax exempt interest is being added back on the same schedule, which is flowing automatically from the federal entries. Am I doubling up on the addbacks? Should I not do the fiduciary adjustment, or should I back out the NY muni interest from line 20? My software is not too K-1 friendly (ATX). My take is that the fiduciary adjustment is taking into account all of the interest and expenses addbacks including the out of state muni interest, and I should not have an entry on line 20, or I should adjust the fiduciary adjustment by the amount of interest on line 20?
My brain is fried, fried fried right now, and I have to get the first estimates correct.

[JG EA]

But all the tax exempt interest is being added back on the same schedule, which is flowing automatically from the federal entries. Am I doubling up on the addbacks? Should I not do the fiduciary adjustment, or should I back out the NY muni interest from line 20? My software is not too K-1 friendly (ATX). My take is that the fiduciary adjustment is taking into account all of the interest and expenses addbacks including the out of state muni interest, and I should not have an entry on line 20, or I should adjust the fiduciary adjustment by the amount of interest on line 20?
My brain is fried, fried fried right now, and I have to get the first estimates correct.

Usually the fiduciary adjustment is the net amount and you don't enter the amounts individually. Add individual amounts up to make sure. Each K-1 does it differently on the state information.

[Burke]

I use ATX too, but I am not sure its a software problem. I finally gave up this year trying to allocate in the proper areas. If you show tax-exempt interest on the K-1 it will flow to the state as an add-back. I used to leave it off the K-1 and enter on Div/Int worksheet to account for the state adjs. It is much easier just to put the tax exempt int from the K-1 and the net K-1 adjustment on the state which accounts for the state info deduction including muni interest. It is usually all you have to do, and this will match with the K-1 if they report such information to the state.