Help with 1041 Sch D!

[taxdan]

I'm a newbie when it comes to fiduciary returns and I'm having trouble getting the sch D on a 1041 estate income tax return to calculate correctly.

Client passed away 10-2-06 and kids sold an inherited rental property on 8-10-07. I'm showing the rental income the estate received along with the sale of the property on the 1041. I used the disposition of assets worksheet to show the sale of the land and building separately and calculate the current depreciation taken that will be recaptured. It looks like it carried the numbers to the 4797 correctly (land Part I and building Part III), but it is taxing everything at the normal income trust tax rates. On the sch D Part III, I want the gains to show up on lines 14a and 14b column 2, but they are just defaulting to column 1 and I do not know how to get them over.

Since most of it is long-term capital gains, we are just choosing to have the trust/estate pay the tax instead of passing it on to the beneficiaries via K-1s. Is that dumb?

Any input would be GREATLY appreciated.

Thank you.

[kcjenkins]

I don't understand, the column one is blue fields because it's an input field. The only default column is the third one.

[taxit]

Is it possible you entered the date of death as the purchase date?

[taxdan]

KC, yes, column 1 has input fields. By default, I just meant that the program automatically put the numbers in there. I can just delete them. My problem is that I don't know how to get them to show up in column 2 without overriding.

Taxit, I've acutally tried a bunch of options for the purchase date to see if I could get it to change. In the dispostion worksheet, it doesn't allow "inherited" for the purchase date, so I'm not quite sure what to put down so it will calculate gains at the long-term rate.

Either way, I just want the darn numbers to show up in column 2 of Sch D part III and I'm not sure how to do it.

Or do I even want the estate to pay the taxes on the gain? Should I leave them in column 1 (the beneficiary column), and distribute the gains to the benificiaries via K-1?

I'm so lost.

[taxdan]

I just figured out the problem I was having with the 1041 sch D. I was checking the box for final return, so the computer would not allow the amounts to flow to column 2 on sch D, part III.

Is there a rule that the trust/estate can not claim the income if it is the final return and everything will be distributed to the beneficiaries this year? Does the estate HAVE to allocate all gains and ordinary income to the benis via the K-1s instead of having the estate pay the taxes?

Thanks so much!

[zeke]

I just figured out the problem I was having with the 1041 sch D. I was checking the box for final return, so the computer would not allow the amounts to flow to column 2 on sch D, part III.

Is there a rule that the trust/estate can not claim the income if it is the final return and everything will be distributed to the beneficiaries this year? Does the estate HAVE to allocate all gains and ordinary income to the benis via the K-1s instead of having the estate pay the taxes?

Thanks so much!

yes. the last year all dist is taxed to beneficiaries.

[taxdan]

Thanks Zeke. That's what I needed to know.