Overview

There are several entries that may be causing the income to be distributed automatically per IRS guidelines. If you want to distribute income when it is not being distributed, see the section below for selections that can be made.

Simple Trust​

Per the Form 1041 instructions,

"A trust may qualify as a simple trust if:

The trust instrument requires that all income must be distributed currently..."

If the trust instrument does NOT require that all income be distributed currently, select complex trust on screen 1.

Final Return

Per IRS guidelines, an entity filing Form 1041 must distribute all income in the final year. If this is not the final year for the return, clear the Final return check box on screen 1.

Choosing to Distribute

If the income should be distributed, even when not required due to the above items, use one of the following entries:

• On screen 1:

  • The Required to distribute all income check box indicates that all amounts, except capital gains, must be distributed to the beneficiaries, even if it distributes amounts other than income during the year. This includes interest, dividends, and other income amounts.

    Tip  Simple trusts do not need to mark this box since a simple trust has to distribute all income to be qualified as such.

  • The Distribute NET capital gains check box indicates that the net amount of capital gains should be distributed to the beneficiaries.

    Note  Net capital gains are distributed by default in the final year of the estate or trust.

    Net capital gains can also be allocated to beneficiaries on screen D2 using lines 17 and 18. Only positive amounts may be entered on lines 17 and 18 per IRS guidelines.

• Any amount entered on screen 4, line 9 Income required to be distributed currently (First Tier). An entry here will force the software to calculate a distribution if there is income on the return.

Caution  Do not enter a zero on screen 4, line 9 Income required to be distributed currently to prevent an amount from being distributed. This may cause unintentional results on the return.

In Drake22 and prior

Choose Distribute all income and/or Distribute NET capital gains from the Other Information section of screen 1:

• The Distribute all income check box indicates that all amounts, except capital gains, should be distributed to the beneficiaries. This includes interest, dividends, and other income amounts.

• The Distribute NET capital gains check box indicates that the net amount of capital gains should be distributed to the beneficiaries.

  Note  Net capital gains are distributed by default in the final year of the estate or trust.