Form 1041 Schedule D: Reporting Capital Gains for Trusts and Estates

Navigating Beneficiary Allocations, Loss Limitations, DNI, Tax Computation Using Maximum Capital Gains Rates, and More

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, June 1, 2017
Recorded event now available


This webinar will provide tax advisers with a thorough and practical guide to reporting trust capital gains income on Schedule D of Form 1041. The panel will demonstrate calculating and allocating capital gains and losses to beneficiaries, discuss the distributable net income (DNI) rules of IRC 643(a), and offer line-by-line guidance on completing the Schedule. The webinar will also address basis consistency reporting, split-interest trust allocations and special Form 8949 issues.

Description

One of the most complex challenges tax advisers face in completing Form 1041 is calculating, allocating, and reporting trust and estate capital gains on Schedule D. Capital gains reporting for trusts and estates contains a number of complicated provisions not found in disclosures for individuals, which make completing the schedule difficult and time-consuming.

In addition to the task of reconciling capital gains statements and computing net investment income (NII), compliance professionals serving fiduciary clients must also contend with intricate DNI considerations in determining what portion of the trust or estate’s capital gains may be allocated to beneficiaries. In many cases, the trust document is unclear on capital gains inclusion in DNI, so trust advisers must be able to interpret the trust agreement to determine what portion of gains is subject to maximum capital gains rates.

Additionally, since capital losses are not deductible to the beneficiaries until the trust terminates, tax advisers must pay close attention to the loss limitation reporting on Part IV of Schedule D to make sure that unused losses are properly reported and carried forward. Allocating gains and losses to the trust or estate as opposed to beneficiaries can often be complicated due to provisions in the operating documents.

Listen as our experienced panel of tax advisers provides a thorough and practical guide to Schedule D Capital Gain and Loss reporting for Trusts and Estates Form 1041.

Outline

  1. Calculating capital gains and losses
  2. Allocating gains and losses between trust/estate and beneficiaries (Part III)
  3. Capital loss limitation (Part IV)
  4. Tax computation using maximum capital gains rates (Part V)
  5. Navigating basis consistency rules
  6. Reporting capital gains for split-interest trusts on Form 5227

Benefits

The panel will discuss these and other important topics in this webinar:

  • Under what circumstances may capital gains be included in DNI, and how does DNI inclusion impact Schedule D reporting?
  • Line-by-line guidance to completing Schedule D
  • Calculating maximum capital gains rates for Part IV of Schedule D
  • Capital loss limitations and carry-forwards to beneficiaries

Learning Objectives

After completing this course, you will be able to:

  • Identify DNI considerations in calculating tax on trust/estate capital gains
  • Determine impact of basis consistency reporting rules on calculating capital gains in Part I of Schedule D
  • Recognize challenges in allocating capital gains and losses between trust/estate and beneficiaries in Part III

Faculty

Deborah Petrone, CPA, MTax, CGMA, Principal
Schlabig & Associates, Kent, Ohio

Ms. Petrone manages her firm’s specialized tax services including preparing fiduciary and estate tax returns, facilitating estate and wealth planning, and entity specification and tax planning. She is a member of the American Institute of Certified Public Accountants and The Ohio Society of CPAs. She also is a member of the Akron Tax Club and Akron Estate and Tax Planning Council.

Luke C. Bean, Esq., LLM
Cushing & Dolan, Waltham, Mass.

Mr. Bean concentrates on estate planning, developing strategies to transfer wealth efficiently using sophisticated planning techniques that defer or eliminate taxes. He also focuses on tax aspects of estate administration. In his prior position, he designed and drafted estate plans for clients with an emphasis on probate avoidance and creditor protection. 

Jeffrey M. Bergman
Schiff Hardin, Chicago

Mr. Bergman works with a broad range of individuals and families to design and implement estate plans, helping clients accomplish their business, tax and charitable objectives. He advises clients on issues including fiduciary responsibilities, estate and income tax planning, and succession planning for family-owned businesses and professional firms. He has presented and authored articles on trust and estate planning issues.


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