Why is the 1041 program not allocating interest income to the K-1 beneficiaries properly?

[doubleg10]

Interest income for the trust is $134.  There are five beneficiaries each receiving 20%.  Per the Distributable Income for Schedules K-1 worksheet, the program is allocating professional fees to the interest income, the non-qualified dividends and the non-passive income.  It then allocates excess deductions (which is its share of the prior years' un-allowed losses from the investment in the PTP as the PTP was sold in 2022).

Total interest income of $134 less share of fees of $4 less share of allocable excess deductions of $29 results in total distributable interest income of $101 (line 13 column a of the Distributable Income for Schedule(s) K-1.

Line 14 - Amount distributed to beneficiaries is $946.  This does not compute.

Thank you for the help.

[sjrcpa]

Is there an overall loss on Page 1 of the 1041? Line 17.

[doubleg10]

No, line 17 on page 1 is $26,618.  It is comprised of $134 interest income, $18,102 ordinary dividends, $7,309 of capital gain, allowable loss of $4,140 from PY suspended losses due to sale of PTP, $5,876 from 4797 gain (part II), less expenses of $663.

[sjrcpa]

How are your tax return options set up?

Is tiered allocation selected?

Have you entered each beneficiary's percent to be distributed?

Is it a simple trust or complex trust?

[doubleg10]

Tax return options set up:

K-1 rounding - distribute to K-1 with largest percentage

Each beneficiary is set up to receive 20% (via list of beneficiaries).  Everything to be split equally five ways.  It is set up for them to receive 100% of trust accounting income.

It is a complex trust.

Beneficiary's Allocation Smart Worksheet:

The tier allocation is not entered.  Line A1 and A2 are blank.

Instead, I have the following:

Each beneficiary's is to receive 20% income distribution deduction for regular tax purposes as 20% (Line B1) and income distribution deduction for AMT as 20% (Line B2). 

Should I utilize first tier/second tier instead of the percentages?

[doubleg10]

Additional reply:

The allocation is the same for 2022 as it was for 2021.  The 2021 return used 20% income distribution (did not utilize first tier/second tier) and the calculations came out as expected.  Each beneficiary received 20% of the interest income as reported on page one of the 1041.

[Just-Lisa-Now-]

is it a final return?

[doubleg10]

Unfortunately, no.