1041 - K-1s

[LorianneH]

I am working on some 1041 returns, and the trusts are for children. These returns have never had K-1s, but this year, ATX is giving me an error stating, "There must be a K-1 attached to this form."

How do I avoid this?

Thanks.

[Terry D EA]

The K-1 is used to report income/loss for the beneficiaries,fiduciary or the estate, trust;etc. Why in the past would not a K-1 have been prepared? By your statement it appears the children are beneficiares of the trust. What type of trust are your speaking of? The best thing you can do is obtain the original trust instrument which will or should contain information regarding the taxation of the trust. I think that ATX is giving you the right flag here as the K-1 is needed.

[Guest Taxed]

I am working on some 1041 returns, and the trusts are for children. These returns have never had K-1s, but this year, ATX is giving me an error stating, "There must be a K-1 attached to this form."

How do I avoid this?

Thanks.

Is this the first time you are using ATX for these returns? A 1041 trust should have at least 1 K-1 if there is a beneficiary. In previous years how was the trust income and expenses reported to the trust beneficiaries? Do you have 2011 return copies?

[Terry D EA]

Again, I repeat, the most important thing here is to obtain the trust instrument. Once you do, there may be some amendments on the horizon. I personally would not proceed until I had that document. It is very important that one CYA and know the facts when it comes to preparing trust returns.

[Catherine]

It is also possible to have K-1s that are all zeros.

I have a couple of children's trusts where no income is distributed; all is held within the trust (which pays trust tax rates on the income; I keep telling the trustees this but ultimately their decision). The trustees, as far as I know, do not send out the K-1s that come with the return as there are no entries. But the K-1s exist.

[Guest Taxed]

As you pointed out the K-1 are all 0 because trust does not distribute any income, BUT the K-1 exists. I still think the trustee should send out the K-1 even if 0. You did your part by giving them a copy of the 1041 plus K1.

[Terry D EA]

<<<<<<It is also possible to have K-1s that are all zeros.>>>>>

<<<<<BUT the K-1 exists. I still think the trustee should send out the K-1 even if 0.>>>>>

Yes, Yes, and Yes.

How many estate tax returns have you done that were all zeros cause someone filed for an EIN for the estate when it was unnecessary? I knowI have done a few. Avoids alot of problems and notices.

[michaelmars]

i send out many complex trusts without k-1's and the efile works.

[LorianneH]

Thank you to everyone for your input!

[LorianneH]

i send out many complex trusts without k-1's and the efile works.

Do you know how to do this with the current ATX? I cannot get the error to go away. I'm thinking I will have to submit zero K-1s.

[OldJack]

Just a reminder, form 1041 is an income tax return. If the trust pays all tax due there is no tax attributes to pass to beneficiaries and no K1 needs to be given or attached to the 1041.