Discussion:Form 1041, Final year, capital loss, charitable and non-charitable beneficiaries
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Discussion Forum Index --> Tax Questions --> Form 1041, Final year, capital loss, charitable and non-charitable beneficiaries
Taxmandancpa (talk|edits) said: | 9 March 2007 |
| Hello everyone! I hope someone can provide the proper guidance on what should be a very simple question:
Final year 1041.....$10,000 long-term capital loss carryover.....90% are charitable beneficiares.....10% is you........ does your personal K-1 have $1,000 or $10,000 as the capital loss carryover? Lacerte's software says $10,000.......... Thanks for everyone's help on this at such a busy time! Dan | |
| 9 March 2007 | |
| The distinction is whether the money going to the charities is getting there via Sec. 642 or Sec. 661 | |
Taxmandancpa (talk|edits) said: | 9 March 2007 |
| Thanks Dennis. I'll look there. This is just a simple estate. The will named a 10% individual residuary beneficiary and 90% charitable organization. The estate realized capital losses on some stocks and bonds while in administration. The assets were distributed 10%-90%.
This was a little bit of taxable income, correctly calculated by Lacerte. But Lacerte allocated the entire capital loss to the 10% beneficiary. Dan | |
| 9 March 2007 | |
| Only $1,000 of the capital loss will pass out to the noncharitable beneficiary. See Reg. 1.642(h)-4. | |
Taxmandancpa (talk|edits) said: | 9 March 2007 |
| Exactly, that is what I was relying on......but Lacerte allocated that capital loss in full to the non-charitable beneficiary and it just didn't logical I'd need to over-ride their calculation, especially after I called them and they say the program is designed to allocate 100% to the non-charitable beneficiary. This is why I am second guessing myself. | |
| 9 March 2007 | |
| The problem is whether you are classifying the charity as a beneficiary (under 661) and producing a K-1 or taking a deduction for a charitable contribution on Schedule A (under 642(c).(Personally I can't see how the software knows the beneficiary is a charity unless you did something to tell them. | |
| 10 March 2007 | |
| Right. In the Lacerte system, all 642(c) deductions bypass the distributions allocation screen, and thus, there would only be one beneficiary for allocation purposes. | |
Taxmandancpa (talk|edits) said: | 10 March 2007 |
| well, Dennis, I did set the charitable beneficiary up as a 90% charitable payee, not as a "K-1" beneficiary....either way, my understanding is there is no K-1 for a charitable beneficiary.
And, even if the charity got a K-1, the individual beneficiary would have only $1,000 on their K-1. Dan | |
| 10 March 2007 | |
| Actually (we've had this discussion) whether or not the charity gets a K-1 depends on how the document is written. The point here is that the only way you are going to get the software to allocate is to produce a K-1 for the charity as 90% beneficiary(or override) You have told the software that there is only one beneficiary and it believed you. | |
