Enter net income items to specially allocate to beneficiaries (1041)

Complete these steps to specially allocate net income items to beneficiaries. 

  1. Click the Beneficiaries tab in a 1041 project and enter beneficiary information if you haven't already.
  2. Click Special Allocations on the left.
  3. Highlight a beneficiary and click Edit to enter information in the fields.
  4. Click Save.
  • 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.
  • If the distribution is proportionate among the income types, leave these fields blank and click Allocations to the left and enter the distribution amounts and percentages in the Income distribution fields.
  • Enter amounts and percentages to allocate section 1231 gain separately from other long-term capital gains. If the distribution of section 1231 gain is proportionate to the distribution of total long-term capital gains, you may leave these fields blank and enter the distribution amounts and percentages in the Long-term capital gains fields in the Allocations screen.

Example

If the trust document requires that the first beneficiary receives 100 percent of the income from rental properties and that all other income is divided equally between the second and third beneficiaries, the following would be your data entry assuming all beneficiaries are first tier beneficiaries.

  • For the first beneficiary, in the Special Allocations screen, highlight the beneficiary, click Edit, and enter 100.0000 in the Rental real estate: Required percent field.
  • For the second and third beneficiaries, on the Federal Allocations screen, highlight the beneficiary, click Edit, and enter 50.0000 in the Income distributions: Required percent field.

Notes

  • Do not use the Special Allocations screen for qualified subchapter S trusts, charitable remainder trusts, and pooled income funds using the ownership share option to allocate amounts to beneficiaries.
  • Do not use discretionary amount and percentage fields for the following return types: simple trusts, grantor trusts, and agency relationships.
  • Do not use required amount fields for the following return types: grantor trusts and agency relationships.
  • The First tier beneficiaries: Allocate all items, except capital gains, equally field on the Allocate screen has precedence over required amount and percent fields in the Special Allocations screen.
  • If you enter amounts or percentages in the Special Allocations screen for an income type (for example, interest income), Onvio Tax removes the income type 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.

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