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.
- Select theDeductionsfolder.
- On theDeductscreen, open the statement window for the expense.
- Choose how to allocate the expense indirectly:
- Leave theIncome Typefield blank to allocate the expense indirectly to all income types.
- EnterTAXinIncome Typeto allocate to taxable income types only.
- Enter the expense amount on the same line as the code.
- Go to theAllocationfolder.
- On theAllocatescreen in the Exclude Indirect Expense section, clear theShort-term gains,Long-term gains, and/orSection 1231 gainscheckboxes as needed.noteDepending 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 theDistscreen in theAllocationfolder and mark theIncludible in distributable net income per trust document: 100% of capital gainscheckbox.
- To include a portion of capital gains in DNI other than 100 percent of the amount distributed to beneficiaries, go to theDistscreen in theAllocationfolder 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)
