Form 1041 - Capital Gains and Losses

Capital gains and losses (investment income) can be allocated to the Beneficiaries.

To indicate this in the program:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand, click Gain or loss on the sale of investments to expand, then click Beneficiaries share of capital gain/loss.
  3. Continue with the interview process to enter all of the appropriate information.

Per IRS Instructions for Form 1041 and Schedules A, B, G, J, and K-1, on page 29:

Line 3

Include all capital gains, whether or not distributed, that are attributable to income under the governing instrument or local law. For example, if the trustee distributed 50% of the current year's capital gains to the income beneficiaries (and reflects this amount in column (1), line 19 of Schedule D (Form 1041)), but under the governing instrument all capital gains are attributable to income, then include 100% of the capital gains on line 3. If the amount on Schedule D (Form 1041), line 19, column (1), is a net loss, enter zero.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.