State tax refunds on Form 1041 and Tax Benefit Rule

[DW3]

Why doesn't the 1041 program consider the tax benefit rule for state tax refunds?  If a trust was limited to a $10,000 state tax deduction in 2018, why should it then report the refund as income in 2019?

[Accountant-Man · Accepted solution]

It shouldn't, but it is not programmed like the 1040.

Do it manually; enter the refund as income, then back it out "As per Rev. Rul. 79-15, no tax benefit."

You can see I'm old since I have been doing this since 1982, and I still remember RR 79-15.

[DW3]

Thank you for responding!

[Accountant-Man]

YW, and thank you for thanking me.