1041-US: Amounts on Schedule K-1 are not proportional to the income types on Form 5227 (FAQ)

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Question

Why are the amounts on Schedule K-1 not proportional to the income types on Form 5227?

Answer

According to the rule in IRC section 664(b), income from a charitable remainder unitrust or a charitable remainder annuity trust is distributed in order of taxability. Investment ordinary income (other than qualified dividends) is distributed first, followed by excluded ordinary income, investment qualified dividends, excluded qualified dividends, investment short-term capital gains, excluded short-term capital gains, long-term capital gains (by taxability), nontaxable income, and finally, corpus. The amounts available for distribution include undistributed amounts from prior years, shown in Form 5227, Part II. See Reg. 1.664-1(d) for more details.

Related topic: 1041-US: Form 5227 FAQs

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