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Question

Why is Form 1116 not prepared even though information is entered on Screen 1116?

Answer

If 100 percent of the current-year foreign tax credit is allocated to the beneficiaries (on a simple trust, on a final return, through data entry on Screen Allocate in the Allocation folder, or in View > Beneficiary Information > Federal tab), Form 1116 is not prepared. Only fiduciary amounts are reported on Form 1116. All current-year foreign income and tax are reported on the beneficiary’s Schedule K-1.

To prepare Form 1116 for a simple trust and retain the credit at the trust level, mark the Final return or simple trust: Allocate credits, estate taxes, or state withholding between trust and beneficiaries checkbox on Screen Allocate in the Allocation folder.

Related topic: 1041-US: Form 1116 FAQs

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