Form 1041 Advanced Series Part 2: Issues with Cash & Property Distributions 2024

Overview

This is the second in a four-part series. One of the basic rules in fiduciary taxation is that the person or entity that receives the taxable income from the trust or estate is taxed on that income. The calculation of Distributable Net Income (DNI) and the Distribution Deduction determine the allocation of the tax burden between the fiduciary entity and the beneficiary. Therefore, when distributions are made that “carry out” DNI, the fiduciary entity operates as a conduit and the beneficiaries are taxed on the amounts reflected on the Schedule K-1. The fiduciary entity receives a corresponding distribution deduction. When taxable income is accumulated by the entity, the fiduciary pays the tax. We will explore the various distributions made to beneficiaries and their impact on the entity’s taxation.

Highlights

Calculating DNI & the Distribution Deduction
Determining Types of Distributions and Whether a Distribution "Carries Out" DNI
In-Kind Distributions & the Impact on the Distribution Deduction
Depreciation and the Distribution of In-Kind Property
Distributions that Result in "Kenan Gain"
Funding a Pecuniary Bequest with Depreciated Property
IRC Sec. 643(e)

Prerequisites

Form 1041 Advanced Workshop Part 1

Designed For

Tax practitioners, accountants and financial professionals.

Objectives

Review the calculation of DNI & the Distribution Deduction
Determine the types of distributions and whether a distribution "Carries Out" DNI
Review in-kind distributions & the impact on the Distribution Deduction
Recognize special tax treatment for various types of distributions
Identify distributions that are deductible and those that are non-deductible

Preparation

None

Notice

This course is offered by a 3rd party vendor. Login instructions will not be accessible in the My CPE Tracker section of the ISCPA website. Login instructions will be emailed directly to you by California Education Foundation (CalCPA).