Distributing Capital Gains on Form 1041
Author: Klaralee R. Charlton
| CPE Credit: |
2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC |
Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2025 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card
Distributing capital gains from a trust is one of the most misunderstood concepts in fiduciary income tax. In this course, we will examine the intersection of fiduciary accounting and fiduciary tax to understand when capital gains can be distributed from a trust to appear on a beneficiary’s schedule K-1. We will also review when capital gains should not be distributed and how the terms of the governing documents impact the tax reporting obligations.
Publication Date: January 2023
Designed For
Attorneys, CPAs, Enrolled Agents
Topics Covered
- Form 1041 Recap
- Distributable Net Income
- Fiduciary Accounting
- Distributing Income and Capital Gains on Form 1041 (Examples)
- Review
Learning Objectives
- Describe the fiduciary accounting rules governing the allocation of capital gains and losses to beneficiaries of trusts and estates
- Explain when a trust or estate can distribute capital gains to a beneficiary on a schedule K-1
- Understand when not to allocate capital gains from a trust or estate to a beneficiary
- Analyze the potential benefits making certain elections to allocate capital gains to beneficiaries
- Recommend drafting techniques to achieve the optimal income allocation between the trust/estate and beneficiaries
Level
Intermediate
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
Basic understanding of Fiduciary Income Taxation
Advance Preparation
None
