11189: 1041 - Simple Trust Requires a K-1

MISSING OR SUPPRESSED K1: At least one Schedule K-1 must be included in a return when a estate or trust distributes income. Make sure at least one K1 screen has been completed and that the "Suppress K-1 schedules and letters" check box on screen PRNT is not marked. See line 18 of the Form 1041 instructions for more information on this requirement. 

If allowed to e-file, this would result in IRS Reject F1041-028:

If Form 1041, Line 18 'IncomeDistributionDeductionAmt' has a non-zero value and 'section642iCd' with the value "SECTION 642(i) TRUST" is not present in the return, then Item B 'ScheduleK1AttachedCnt' must have a non-zero value.

This message usually means that in the Type of Entity area on screen 1 of the 1041 you have marked Simple Trust, but you have not entered screen K1 to produce a Schedule K-1 for the beneficiary.

The 1041 Instructions, page 18, says:

"A trust may qualify as a simple trust if:

1. The trust instrument requires that all income must be distributed currently;
2. The trust instrument doesn't provide that any amounts are to be paid, permanently set aside, or used for charitable purposes; and
3. The trust doesn't distribute amounts allocated to the corpus of the trust."