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Allocation

Allocate expenses indirectly to capital gains

You can allocate expenses directly or indirectly to capital gains. Indirect expenses aren't automatically allocated to capital gains. Do the following to allocate them indirectly.
  1. Select the
    Deductions
     folder.
  2. On the
    Deduct
     screen, open the statement window for the expense.
  3. Choose how to allocate the expense indirectly:
    • Leave the
      Income Type
       field blank to allocate the expense indirectly to all income types.
    • Enter
      TAX
       in
      Income Type
       to allocate to taxable income types only.
  4. Enter the expense amount on the same line as the code.
  5. Go to the
    Allocation
     folder.
  6. On the
    Allocate
     screen in the Exclude Indirect Expense section, clear the
    Short-term gains
    ,
    Long-term gains
    , and/or
    Section 1231 gains
     checkboxes as needed.
    note
    Depending on the checkboxes you clear, the application allocates indirect expenses to capital gains only to the extent they're included in distributable net income (DNI). By default, the amount of capital gains included in DNI is the total beneficiary amount from Schedule D, Part III, column (1).
    • To include all capital gains in DNI when all aren't distributed to beneficiaries, go to the
      Dist
       screen in the
      Allocation
       folder and mark the
      Includible in distributable net income per trust document: 100% of capital gains
       checkbox.
    • To include a portion of capital gains in DNI other than 100 percent of the amount distributed to beneficiaries, go to the
      Dist
       screen in the
      Allocation
       folder and enter the amount in the following:
      • Includible in distributable net income per trust document: Short-term capital gain (Force)
      • Includible in distributable net income per trust document: Section 1231 gain (Force)
      • Includible in distributable net income per trust document: Other long-term capital gain (Force)

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