Regarding a 1041 return concerning a complex trust, when I try to distribute only the qualified dividends, the K1 allocates the distribution as if it is partially ordinary dividends and Interest income. How do I get the program to only distribute the qualified dividends without the allocation?
I believe that the DNI calculation doesn't work the way you want it to, and that the software is working correctly.
Go to Forms, Dist Inc-K-1. Override the amounts on line 15, cols a, b and c and enter the amounts that you want to distribute.
Question: Once you've decided to make an income distribution from a complex trust, can you pick and choose which elements of income you are distributing, or must you pro-rate it?
I think you have to prorate it. Some things can be allocated to income or to corpus (like capital gains contributions, or allowances for depreciation) at the trustee's discretion or in accordance with the trust instrument and/or local law. But IMHO DNI carries out all the income prorata.
Thanks. That's the way I've always handled it, but this thread made me realize that I was just trusting my software, and had never considered other possibilities.
