1041-US: Ordinary loss subtracted on Schedule K-1 (FAQ)

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Question

Why is interest income less than expected on Schedule K-1 (Form 1041)?

Answer

Per the form instructions, you cannot report a negative amount on Schedule K-1, lines 1 through 8. If the return has business or rental loss allowed in the current year, interest, dividend, or other income will decrease when reporting the net income allocated to the beneficiary on Schedule K-1. You may see the reclassification of the allowed loss against the other income types in the return by viewing the Allocation of Expenses by Income Type Worksheets. To force net income amounts that are different, use the fields in the Net Income by Type section of Screen Allocate in the Allocation folder.

Related topic: 1041-US: Beneficiary distribution calculations FAQs

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