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Beneficiary Information > Federal tab
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If the allocation fields are blank for all beneficiaries, the income types are allocated equally among all first tier beneficiaries for simple trusts, grantor trusts, agency relationships, and all final returns. If this is the desired outcome, use the
First tier beneficiaries: Allocate all items, except capital gains, equally
field on the Allocate Screen to improve processing speed.Allocations group box
Income distributions
Required amounts and percentages are applicable to first tier beneficiaries, while discretionary amounts and percentages are applicable to second tier beneficiaries. For estates and complex trusts, a beneficiary may be both first and second tier.
Use these fields to allocate all ordinary (non-capital) income types net of deductions using a single set of amounts and percentages. When you enter both amounts and percentages for estates and non-grantor trusts, the amounts allocate first and then the percentages are applied to the remaining balance.
note
- Discretionary amount and percentage fields are not available for the following return types: simple trusts, grantor trusts, agency relationships, qualified subchapter S trusts, and charitable remainder trusts.
- Required amount fields are not available for the following return types: grantor trusts, agency relationships, qualified subchapter S trusts, and charitable remainder trusts.
- TheFirst tier beneficiaries: Allocate all items, except capital gains, equallyfield on the Allocate Screen has precedence; therefore, when that field is marked, the required amount and percent fields are not available on the Federal tab.
- Required distributions are based on net accounting income amounts. If there are both required and discretionary distributions, the required distribution is allocated first for all applicable beneficiaries and then any remaining net income is allocated using the discretionary allocation information.
- If amounts or percentages are entered in the Special Allocations dialog for an income type (for example, interest income), the income type is removed from the allocation using the income distribution amounts or percents. Therefore, you must specify a different allocation for that income type in its entirety for all beneficiaries who should receive distributions of that specific income type.
Short-term capital gains / Long-term capital gains
Required amounts and percentages are applicable to first tier beneficiaries, while discretionary amounts and percentages are applicable to second tier beneficiaries. For estates and complex trusts, a beneficiary may be both first and second tier.
Use these fields to allocate all capital gains net of deductions using a single set of amounts and percentages. When you enter both amounts and percentages for estates and non-grantor trusts, the amounts allocate first and then the percentages are applied to the remaining balance.
note
- Discretionary amount and percentage fields are not available for the following return types: simple trusts, grantor trusts, agency relationships, qualified subchapter S trusts, and charitable remainder trusts.
- Required amount fields are not available for the following return types: grantor trusts, agency relationships, qualified subchapter S trusts, and charitable remainder trusts.
- TheFirst tier beneficiaries: Allocate capital gains equallyfield on the Allocate Screen has precedence; therefore, when that field is marked, the required amount and percent fields are not available on the Federal tab.
- You cannot use amounts to allocate capital losses.
- For non-final returns of estates and non-grantor trusts, note the following:
- If you leave these fields blank, all capital gains and losses allocate to the fiduciary.
- As a default, capital losses do not allocate in excess of capital gains. To allocate losses, enterXin theAllocate capital losses to beneficiaries on non-final returnfield on Screen Allocate.
- For final returns, grantor trusts, and agency relationships, note the following:
- If you leave all fields blank, capital gains allocate equally to the beneficiaries.
Other Allocations group box
Depreciation / amortization
Enter a percentage to directly allocate depreciation and amortization to the beneficiary. The calculated amounts from these entries report on the beneficiary’s Schedule K-1, box 9, instead of Schedules C, E, and F and Form 4562.
Depletion
Enter a percentage to directly allocate depletion to the beneficiary on Schedule K-1, box 9, instead of Schedule C or E.
Credits / estate tax / Foreign tax credit
Enter the beneficiary’s percentage of any current-year business or foreign credits and the estate tax deduction. If you leave these fields blank and have not marked the
First tier beneficiaries: Allocate all items, except capital gains, equally
field on the Allocate Screen, the following will happen.- For non-final returns of estates and complex trusts, 100 percent allocates to the fiduciary.
- For final returns and simple trusts, the following allocations occur.
- 100 percent of the current-year credit allocates to the beneficiaries.
- If you do not want 100 percent of the current–year credit allocated to the beneficiaries, mark theFinal return or simple trust: Allocate credits, estate taxes, or state withholding between trust and beneficiariesfield on Allocate Screen and enter percentages in the fields on this tab for each beneficiary. To allocate 100 percent to the fiduciary, leave the percent fields blank.
- For grantor trusts and agency relationships, 100 percent of the credit always allocates to the beneficiaries.
Withheld income taxes / backup withholding
The amount entered here allocates in the
Section 3406 backup withholding allocated to beneficiaries
field on the Allocate Screen up to the amount of withholding entered in the following locations:- Statement dialog for theInterest income,Dividends,Other income, orCapital gains or (losses)field on the Income Screen
- Statement dialog for theInterest income,Dividends, orCapital gains or (losses)field on Screen Broker.
- Statement dialog for theOther withholdingfield on the PayExt Screen
- Federal tax withheldfield on the 1099M, 1099R, W2, and W2G Screens
- Federal income tax withheldfield on the K1-3 Screen
Oil / Gas activities (Generate oil / gas schedule)
To produce the Beneficiary’s Oil / Gas Summary Schedule, enter a percentage to indicate what portion of the information on the Oil / Gas Well Schedule should be reported to the beneficiary.
note
This percentage is only for the Beneficiary’s Oil / Gas Summary Schedule and does not affect the amounts reported on Schedule K-1 or on the Grantor / Agency Report.
Other Returns group box
Charitable remainder trusts: Annuity income
If you do not wish to use this field, you can also force the total annuity income received by all beneficiaries on the SIT Screen. The amount you enter on the SIT Screen divides equally among the beneficiaries, and nothing happens with the amount you enter in this field.
Pooled income fund: Ownership share
If you are preparing a return for a pooled income fund and an option has been entered in the
Pooled income funds: Allocate based on ownership share
field on the Allocate Screen, enter the beneficiary’s share of ownership. 100 percent of the income allocates based on this owner’s share divided by the sum of all owners' shares.Other buttons
Special Allocations button
Select this button to open the Special Allocations dialog to specially allocate net income items for the beneficiary.
Partial Grantor button
Select this button to open the Partial Grantor dialog to complete the Grantor / Agency Report for partial grantor trusts for the beneficiary.
note
This button is enabled only when the return is a partial grantor trust and the
Partial grantor trust beneficiary
checkbox in the Other Information group box on the Beneficiary tab is marked for the beneficiary.Form 3520-A Information button
This button is only available for grantor trust returns.