2018 UltraTax CS
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.