DANRVAN

That is correct for that situation.

Correct. Only distributions of taxable income. Trust takes income distribution deduction for same amount.

"or as allowed by the governing instrument"

Would also be eligible for accrual accounting election; and an initial short year that might result in better matching of income and expenses.

As long as it was a qualified revocable trust under sec 676.

Will the trust make distributions to a public charity as instructed by the governing instrument? If so, the they might be able to take a Charitable deduction for funds permanently set aside. Possibly a Private Foundation?

Please forgive my double negative error, that should have read "don't think the estate is entitled."

There would be a K-1 if taxable income was distributed.

I don't think so, unless there is some special rule for community property states.

Should be treated like the sell of any other business and recognize goodwill.

Off the top of my head, I am going to say probably not. First of all I don’t think it would be allowed since it was not spelled out in the will. Secondly, I don’t believe the retirement account would be included in the gross estate of the decedent. It should be excluded as a charitable deduction regardless of whether a 706 was filed. Therefore, if it was not part of the estate, I don't think the estate is not entitled to take a deduction on 1041.

Does the K-1 show ordinary income or royalty income.

That does not sound the correct, I believe it should off set passive income, not ordinary income. Is this a new client for you?

Should be line 20-T on the K-1 input sheet.

I have a similar situation. Partnership makes distribution to trust; trust makes distribution to individual. Trust deducts tax prep and income distribution deduction. Very simple. Trust also follows 65 day rule since partnership makes distribution right at year end.

The second question, are there any computations on the tax return affected by tax exempt interest such as SS income or MAGI?

Just curious, are the two teenagers from a previous marriage so wife did not get 100%? Under that scenario in Oregon, wife would get 50% and teens 25% each.

You referred to the first amount from line 8, can you be more specific as to where the last four amounts came from?

Could be an issue of marital vs nonmarital property depending on where the funding of the property came from. There are cases where 100% ownership turned out to be 50% ownership; and 1/2 step up bass instead of full step up in basis. Estate attorney should have sorted it out.

You can put it directly on line 1b without explaining.

If you are working on the individuals 1040, just let it flow from the K-1 to SE, then enter on line 1b of form SE, which is specifically designated for the CRP subtraction; same as you would if it came from Schedule F of 1040. The 1065 preparer should show as other information the amount of SE income from CRP, especially if going to non-client.

If the spouse living apart had gross income of $5 or more then he or she would need to file. It appears to me that 1.161-1 states that Gross Income does not include non-taxable social security income, So if spouse in OP has non-taxable social security as only source of income, then the extra deduction should be allowed as I see it.

Yeah a real cliffhanger! I wish somebody who has "read the book" will tell us how it's going to end.

Then it goes on to say " If (a) or (b) applies, see the instructions for lines 6a and 6b to figure the taxable part of social security benefits you must include in gross income." From there lines 6a and 6b will determine the amount of SS included in gross income. I interpret that to say the non-taxable amount of Social Security is not included in gross income. That appears to agree with the definition of gross income per § 1.61-1 per my last post.

Hold on until you read 1.161-1. § 1.61-1 Gross income. (a) General definition. Gross income means all income from whatever source derived, unless excluded by law. That seems to say the excluded amount of SS is not included in gross income!!