1041-US: Methods to allocate net income for pooled income funds (FAQ)

Alerts and notices
Leave feedback

Contact information (optional):

Leave this blank:

Please tell us how we can make this information more helpful.


Characters left:

Question

How do you allocate net income to beneficiaries for pooled income funds?

Answer

There are two methods for allocating net income to beneficiaries for pooled income funds. 

Ownership share

On Screen Allocate, enter a code in the Pooled income funds: Allocate based on ownership share field to allocate ordinary income or capital gains based on a percentage of ownership. Then enter a percent in the Ownership share field for each beneficiary in View > Beneficiary Information > Federal tab > Other Returns group box. One-hundred percent of the income is then distributed based on the ownership share entered for one beneficiary divided by the sum of the ownership share entered for all beneficiaries. 

Notes

  • A statement is prepared for Form 1041, Page 1, line 18 for the detail calculation of the distribution deduction. Use the statement dialog for the Computation of income distribution deduction field on Screen Allocate to use your own detailed calculation. 
  • If you are allocating only ordinary income using ownership share (code 1), capital gains will remain at the fund level unless allocated to beneficiaries on this screen (equally) or in the Beneficiary information. 
  • If you are allocating only ordinary income using ownership share (code 1) on a final return and there is no allocation entered for capital gains, then as a default, capital gains will allocate using ownership share.

Percentages or amounts

Enter percentages or amounts to allocate ordinary income and capital gains in View > Beneficiary Information > Federal tab. Use the statement dialog for the Computation of income distribution deduction field on Screen Allocate to show your own detailed calculation. 

Related topic 

1041-US: Beneficiary distribution calculations FAQs

Share This