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In form 1040, the 1041 Schedule K-1 Worksheet – Estates and Trusts Codes for line 11, are not correct.

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In form 1040, the 1041 Schedule K-1 Worksheet – Estates and Trusts Codes for line 11, are not correct.

Glenn Z

 

The regulations for taking “Excess Deductions on Termination-Non-Miscellaneous Itemized Deductions” in a Trust have been changed for 2020.  In form 1040, the form 1041 Schedule K-1 Worksheet – Estates and Trusts Codes for line 11 that now appear in the ProSeries 1040 program are the same as they were for 2019.  They have not been changed to reflect the changes made for 2020.  The codes in ProSeries 1041 returns for the K-1 line 11 are correct.   The codes for line 11 in form K-1 for the 1040 returns should be as follows:

  • Code A Excess Deductions on Termination – Section 67 (e) Expenses
  • Code B Excess Deductions on Termination-Non-Miscellaneous Itemized Deductions
  • Code C Short-Term Capital Loss Carryover
  • Code D Long-Term Capital Loss Carryover
  • Code E Net Operating Loss (NOL) Carryover for regular tax purposes
  • Code F NOL Carryover for minimum tax purposes

The Codes that applied for 2019 are as follows:

  • Code A Excess Deductions
  • Code B Short-Term Capital Loss Carryover
  • Code C Long-Term Capital Loss Carryover
  • Code D Net Operating Loss (NOL) Carryover for regular tax purposes
  • Code E NOL Carryover for minimum tax purposes

With the current ProSeries program, if a trust has Excess Deductions Upon Termination-Non-Miscellaneous Deductions, it will not be possible to enter those deductions in the proper section of the 1040 tax return.

Glenn Zoellick

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