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Old 04-10-2015, 11:50 AM
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K-1 amounts don't make sense

My parents set up a trust for my siblings and I. My father wrote me a check for $25K this year as my share from the trust. I received a schedule K-1 from my father's lawyer, but the numbers don't seem to correspond to the amount he gave me. These are all the figures on the K-1:
Box 2a: $13241
Box 2b: $10959
Box 4a: $32432
Box 14 Code A: $3393
Box 14 Code B: $67 (foreign taxes)
Box 14 Code E: $2328
Box 14 Code I: $2218 (foreign gross receipts and expenses)
Box 14 Code I: 67 (AMT foreign taxes)
Box 14 Code I: 558 (AMT foreign gross receipts and taxes)

It looks to me like I am reporting (and will be paying taxes on) a lot more $ than I received. Am I misinterpreting something?



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Old 04-10-2015, 02:04 PM
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Box 2a: $13241========>>this is the amt of your share of dividends and you need to report the amount on 1040 line 9a.
Box 2b: $10959========>>>>>> this is the amt of your share of qualified dividends and you need to report the amount on 1040 line 9b; Qualified dividends are generally dividends from shares in domestic corps and certain qualified foreign corps which you have held for at least a specified minimum period of time, known as a holding period.
Box 4a: $32432==========>>t long term capital gain is reported on 1040 line 12 of Sch D and form 8949
Box 14 Code A: $3393========>>>>this is nontaxable tax exempt interest income reported on 1040 line 8b.
Box 14 Code B: $67 (foreign taxes)===========>>>>>I guess you may deduct the taxes on your US return; on 1040 line 48 or line 8 of Sch A of 1040
Box 14 Code E: $2328=========>>>>>>>
Box 14 Code I: $2218 (foreign gross receipts and expenses)=====>>>>>>>>>
Box 14 Code I: 67 (AMT foreign taxes)========>>>>>same as above box 14 code B.
Box 14 Code I: 558 (AMT foreign gross receipts and taxes)====>>>>>>>>the trust may be liable for the AMT. Certain credits may be limited by any tentative minimum tax figured on line 37, Part III of Sch I of Form 1041, even if there is no AMT liability.If the trust takes a deduction for distributions to beneficiaries, the trust needs to complete Part I and Part II of Sch I even if the trust does not owe AMT. the trust needs to allocate the income distribution deduction figured on a minimum tax basis among the beneficiaries and report each beneficiary's share on Sch K-1 of Form 1041.

It looks to me like I am reporting (and will be paying taxes on) a lot more $ than I received. Am I misinterpreting something===========>> Basically , a grantor Trust is taxable to the grantor; the grantor is the person who created and funded the Trust, and a grantor Trust is one where the grantor has retained certain powers.So, the entire $25K is included on your father’ tax return; you do not include the distribution to your income tax return. The Sch K-1 form may report information other than your share of income (or loss). Box 9, for example, shows the amount of depletion, depreciation and amortization deductions allocated to you if there is. so, you need to contact the attorney/accountant that prepared the return of 1041 for more accurate info in detail.


Accurate filing of the forms is important because the IRS continues to match income from Sch K-1 to other tax returns.
Note;as you are the beneficiary of the Trust, it is vital that you know the tax rules that apply;if the trust were a non-grantor Trust and it had $25k distribution to you, three things would happen. First, the Trust itself would file its own income tax return ,Form 1041,to report its income for the year. Second, the Trust would issue a sch K-1 Form to you, alerting you that you had $25k in income in the form of a Trust distribution. Third, you would report the Trust distribution as income on your own personal income tax return Form 1040.



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