I’ve got a nonprofit client that was named a 50% beneficiary in a deceased individual’s will. The succession assets were transferred to a charitable trust. The Trust didn’t disperse any funds in 2019. In March 2020 The Trust disbursed $200,000 and sent a letter to the nonprofit requesting that it provide a signed receipt of the donation as required by the IRS. Then in September 2020 the Trust issued a 2019 K-1 (1041) to the nonprofit showing interest income, dividends, and long term capital gains totaling about $170,000. Does the nonprofit treat the distribution from the Trust as a donation (like the initial letter indicates), or is the nonprofit required to report the income as UBIT in 2019 per the K-1 received? If it is UBIT, where does the K-1 get entered in the Exempt Org module?
Thanks for the help!