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Form 5227
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This article applies to:

  • Product: ONESOURCE Trust Tax

The General Information, Options, Overrides and Net Investment Income Collapsible Section

The
General Information, Options, Overrides and Net Investment Income
 collapsible section is used to set additional print and compute options (including using the simplified method to report Net Investment Income), enter overrides for current year Net Investment Income, and to complete the following line items on Form 5227:
  • Box C (Fair market value (FMV) of assets at end of tax year) in the Identification area.
  • Box D (Gross Income) in the Identification area.
  • Line 23 (Charitable Deduction) in Part I.

Setting Additional Compute and Print Options

To set additional compute and print options:
  1. Open the account.
  2. Select the
    Form 5227
     subtopic. The Form 5227 page displays and shows the compute and print options under the
    General Information, Options, Overrides and Net Investment Income
     collapsible section.
  3. Select the
    Include capital gains in the gross income when allocating expenses
     check box if you want to allocate a prorata portion of allocable expenses to capital gains.
  4. Select the
    Distribute depreciation, depletion and amorization to the beneficiaries
     check box if you want depreciation, depletion and amortization distributed to the recipients proportional to the income distributed.
  5. Select
    Save
    .

Using the Simplified Method to Report Net Investment Income

Form 5227 requires CRATs and CRUTs to track net investment income received and distributed. A nongrantor CLT or PIF calculates its net investment income and reports any NIIT liability on Form 1041.
Net investment income can be reported using the default (or Section 664) method or the simplified method. The default method integrates the net investment income items with the tax rate class structure under the four-tier system. The simplified method uses two classes (net investment and non-net investment income), which are separate and apart from the four-tier category and class structure.
In ONESOURCE Trust Tax, the sections of the grids under the
Schedule of Distributable Income
 and
Expanded Balance Sheet
 collapsible sections are controlled by whether the default or simplified method is used to report net investment income. When the default method is used, the grids separate the income items into excluded income and accumulated net investment income sections. The following graphic shows the grid under the
Balance Sheet
 collapsible section when the default method is used:
When the simplified method is used, the grid under the
Schedule of Distributable Income
 collapsible section includes the
Simplified NII Calculation
 section, and the grids under the
Balance Sheet
 and
Expanded Balance Sheet
 collapsible sections show the
NET ASSETS
 section. The following graphic shows the
Balance Sheet
 collapsible section when the simplified method is used:
Using the simplified method also allows you to enter an override for a CRAT or CRUT in the
Beginning undistributed net investment income
 field under the
General Information, Options, Overrides and Net Investment Income
 collapsible section. The override amount you enter and save automatically rolls to the next tax year.
To use the simplified method to report net investment income:
  1. Open the account.
  2. Select the
    Form 5227
     subtopic.
  3. Select the
    Use simplified net investment income calculation
     check box.
  4. For a CRAT or CRUT only, enter an override in the
    Beginning undistributed net investment income
     field, if needed. This amount automatically rolls to the next tax year after it is saved.
  5. Select
    Save
    .

Entering Overrides for Current Year Net Investment Income

When ONESOURCE Trust Tax computes net investment income, it makes certain assumptions regarding the treatment of income and gains reported in Part I of Form 5227. If necessary, you can override the computed current year net investment income amounts using the Form 5227 Details page, which is accessed from the
General Information, Options, Overrides and Net Investment Income
 collapsible section on the Form 5227 page.
To enter overrides for current year net investment income:
  1. Open the account.
  2. Select the
    Form 5227
     subtopic.
  3. Select the
    Detail
     link for
    NII Current Year Overrides
    .
  4. On the Form 5227 Details page, enter an override in the
    Amount
     field for each income item that needs to be overridden.
  5. Select
    Save
     in the upper left corner of the Form 5227 Details page.
  6. Select
    Close
     to return to the Form 5227 page.

Entering Overrides for the Year-End FMV of Trust Assets, Gross Income and Charitable Deduction

Overrides for the following Form 5227 line items can be entered using the
General Information, Options, Overrides and Net Investment Income
 collapsible section on the Form 5227 page. Line C (Fair market value (FMV) of assets at end of tax year) in the Identification area. Line C applies to all split-interest trust types.
  • Line D (Gross income) in the Identification area. Line D applies to all split-interest trust types.
  • Line 23 (Charitable deduction) in Part I. For a PIF, the charitable deduction includes the specific deduction for long-term capital gains permanently set aside for charitable purposes.
To enter overrides for the year-end FMV of trust assets, gross income and charitable deduction:
  1. Open the account.
  2. Select the
    Form 5227
     subtopic.
  3. To enter overrides for gross income or the charitable deduction, select the
    Detail
     link for
    Income/Expense Overrides
    .
  4. On the Form 5227 Details page, enter the override amounts in the applicable
    Amount
     field.
  5. Select
    Save
     in the upper left corner of the Form 5227 Details page.
  6. Enter an override for the year-end FMV of trust assets in the
    FMV of assets at end of tax year
    .
  7. Select
    Close
     to return to the Form 5227 page.