1041 Walton Trust Case Study Facts: Data Entry

Walton Case Study Facts: Introduction

This page is used to provide help when you are not sure where to enter data. You do not need this page if you know where all the information belongs.

Forms are accessed from the Forms List window at the left of the screen. Make sure Organizer is selected.

Fiduciary Information

  1. Select Quick Track > Basic Return Data.
  2. Verify all the return information.

    ABC Trust Company
    Trust Tax Division
    401 Channelside Drive
    Tampa, FL 33602
  3. Select the Entity Type: Complex Trust ($100 exemption). The system default is simple trust.
  4. Scroll down and enter the Date Trust Created: 12/16/2009.
  5. Verify the Trust EIN: 12-3456789.
  6. Enter the Fiduciary’s Employer ID #: 98-7654321.
  7. In the left pane, select Organizer > General Information > Paid Preparer/ERO Information > Preparer Information tab. Then select the option to Suppress the paid preparer information.

Return Options

  1. Select General Information > Return and Print Options > General Options tab.
  2. Verify that the option to print the date/time on each page has been selected.
  3. Select the option to suppress page numbers.
  4. Select General Information > Return and Print Options > Print Options tab.
  5. Select Option [101] Print Schedule K-1 instructions to the Beneficiary.
  6. Select Option [111] Print a separate statement reflecting the capital loss carryover information.
  7. Select the Compute Options tab.
  8. Select Option [206] Totally distribute Depreciation to beneficiaries.
  9. Select Option [208] Foreign taxes should be totally retained by the trust.
  10. Verify that this option has been selected: Option [214] Net tax exempt income should be entirely distributed.

Income

Income and deductions may be entered as total amounts for some of the various categories of income and expenses; no detail schedules will be printed. Alternatively, you must enter the detail for each category for detail schedules to print.

If conflicting entries are made for the same item, the total entry will override and be used in the return but a detail statement will be generated based on the detail entries.

Enter both a description and the amount on the detail screen as necessary. You must enter a description, if an amount is entered on the detail screen.

  1. Select Organizer > Source Documents (1099s) > 1099-DIV.
  2. Dividend amounts can either be entered as individual 1099-DIV source documents, or they can all be entered in the columnar 1099-DIV input screen. Enter the following dividends using either method described above:
    • Essilor Optic (all qualified dividends): $25,250
    • Shell Oil (none are qualified dividends): $22,600
    • Exxon (all qualified dividends): $ 5,759
    • Pillsbury (all qualified dividends): $ 3,258

Interest

US Government Interest

  1. Select Organizer > Source Documents (1099s) > 1099-INT.
  2. Similar to the dividend income above, interest income can either be entered as individual 1099-INT source documents or in the Columnar 1099-INT input screen. The Columnar 1099-INT input screen has separate sections for US government interest, tax-exempt interest, and foreign interest.
  3. Add each of the following in the United States Government Interest Detail section:
    • US Treasury Note: $ 2,500
    • Common Trust Fund US Government Interest: $ 1,242

Other Interest

  1. In the Columnar 1099-INT input screen, in the Interest Income Detail section, make the following entries in the Box 1 Total Interest column.
  2. Enter an amount next to the description:
    • Third National Bank - CD #27429: $ 2,500
  3. Add new entries below this line:
    • Third National Bank Savings #12-87930: $495
    • Common Trust Fund Other Interest: $ 2,198

Tax-Exempt Interest

  1. Enter each of the following items in the Columnar 1099-INT input screen in the Tax-Exempt Interest section.
  2. Under the Resident Tax-Exempt Income section, select the Tax Exempt Interest field.
  3. Enter an amount next to the description:
    • Florida Tax-Exempt Bond: $ 1,500
  4. Under the Non-Resident Tax Exempt Income section, select the Tax Exempt Interest field.
  5. Add the descriptions and amounts:
    • Texas Educational Development Bond: $ 1,342
    • Illinois Municipal Interest: $ 571

Federally Taxable Resident Municipal Interest

  1. Go to Income > Income.
  2. Click the blue drill-down arrow next to Fed. taxable resident muni. interest. Enter the following detail information and amount:
    • Taxable Municipal Bond: $ 5,550
  3. Click Previous.

Be sure to understand the distinction between resident and nonresident federally nontaxable municipal interest. The terms resident and nonresident refer to where the trust is located.

Rental Property

  1. Select Quick Track > Rent/Royalty.
  2. Enter Palace Property and click OK.
  3. Set Number 10 is automatically generated by the program.
  4. Enter Fair market rental days: 365.
  5. Verify that the Type of Activity is passive.
  6. Select Florida in the State Residency list.
  7. Select the Income and Deductions tab.
  8. Enter the income:
    • Rental Income: $17,500
  9. Scroll down and enter the expenses:
    • Advertising: $ 2,250
    • Insurance: $ 3,500
    • Taxes: $ 500
    • Utilities: $ 6,000
  10. Under Rent and Royalty Information, select Depreciation and Amortization > Asset Detail > Add new asset.
  11. Select Depreciation Detail, and enter Apartment Building and click OK.
  12. Enter the following information for the apartment building:
    • Date Placed in Service: 03/10/2019
    • Regular Cost: $175,000
    • Method: MACRS 27.5 years

Gains and Losses

  1. Select Gains and Losses > Capital Gain (Loss) > Stocks, Bonds, etc. > Add new Capital Gain (Loss).
  2. Enter Koho Corporation and click OK.
  3. Enter the sale information:
    • Sales Price: $16,500
    • Cost: $20,000
    • Date Purchased: 01/01/2010
    • Date Sold: 07/01/2019
  4. Override the Holding Period - Long Term Investment property.
  5. Select Add new Capital Gain (Loss).
  6. Enter 100 Shares IBM and click OK.
  7. Enter the sale information:
    • Sales Price: $ 4,128
    • Cost: $ 2,947
    • Date Purchased: 08/12/2014
    • Date Sold: 11/17/2019

Capital Loss Carryover Information

The trust has carryovers that you need to verify.

  1. Select Gains and Losses > Capital Gains and Losses > Other Information.
  2. Verify that the LT Capital Loss carryover is $ 2,437.

On fields where only losses are entered, such as capital loss carryovers or suspended passive loss carryovers, enter the loss amount as a positive number.

Common Trust Fund Gains and Losses

  1. Select Gains and Losses > Other Information.
  2. Enter the following:
    • Short-Term Capital Gain Dividends: $3,200
    • Long-Term Capital Gain dividends: $ 7,500
  3. Verify that the Common Trust Fund gain/loss is $4,936.
  4. Verify that the ST Common Trust gain/loss is $ - 972.

Deductions

  1. Select Quick Track > Deductions.
  2. For Allocable Deductions, enter an amount in the Automatic column:
    • Fiduciary Fees: $ 2,000
    • Attorney, Accountant, and Preparer Fees: $450
  3. No detail schedules are required for the Walton Trust expenses, so enter the expenses in the Automatic column.
  4. Scroll down to Non-Allocable Deductions, and enter an amount in the Automatic column:
    • Attorney, Accountant and Preparer Fees: $ 350
    • Other Deductions: $ 279

Charitable Deductions

  1. Under Deductions, select the Charitable Deductions tab.
  2. Under the Contributions from Income section, select the PAID field under the Dollar column.
  3. In the Total Entry dollar field, enter $5,000.
  4. Enter $5,000 for Leukemia Society of America.
  5. Click Previous.
  6. In the Tax Exempt Override dollar column, enter NONE.

Beneficiary Information

  1. Select Beneficiary Information > Beneficiary Data > Distribution Input, Totals.
  2. Enter the following
    • Required distributions: $ 1,200
    • Discretionary distributions: $50,000
  3. Scroll down and enter:
    • Trust Accounting Income: $60,700
  4. Either required or discretionary distributions (or both) must be entered in the Total Distributions of Income. Without these entries, Schedules K-1 will not be generated.
  5. Select Quick Track > Beneficiary Information.
  6. Verify all beneficiary information, and enter the required distributions of $1,200 on Marcy.

    Marcy Wainwright
    457 Newks Street
    Tampa, FL 33602

    SSN: 111-11-1111
    Discretionary: 33.333334%
    Required: $1,200
  7. Verify that the state of residency is Florida.
  8. Select the Bene Info - Miscellaneous tab.
  9. Verify that Marcy’s date of birth is 06/04/1973.
  10. Verify all beneficiary information on David:

    David Wainwright
    123 Outpost Way
    Tampa, FL 33602

    SSN: 222-22-2222
    Discretionary: 33.333333%
  11. Verify that the state of residency is Florida.
  12. Select the Bene Info - Miscellaneous tab.
  13. Verify that David’s date of birth is 11/16/1974.
  14. Verify all beneficiary information on Charlotte:

    Charlotte Wainwright
    789 Jet City Drive
    Tampa, FL 33602

    SSN: 333-33-3333
    Discretionary: 33.333333%
  15. Verify that the state of residency is Florida.
  16. Select the Bene Info - Miscellaneous tab.
  17. Verify that Charlotte’s date of birth is 03/26/1976.

Credits

Foreign Tax Credit

  1. Select Credits > Foreign Tax Credit > Add new Foreign Country.
  2. Enter Canada, and select Foreign Tax Credit Information.
  3. On the field Mandatory Country name for calculations and e-file, select Canada from the drop-down list.
  4. Verify that the Foreign Income Type is Passive.
  5. Enter the date that the taxes were paid: 12/31/2019.
  6. Scroll down to Foreign Source Income and Deductions > Foreign Compensation - Foreign Source, and enter the net taxable income outside USA: $25,250.
  7. Click the Taxes Paid/Accrued tab at the top of the screen.
  8. In the Foreign Taxes Paid or Accrued on Dividends column, enter the taxes paid in US dollars: $500.

Minimum Tax Credit

  1. Select Credits > Minimum Tax Credit > Computation of Net Minimum Tax on Exclusion Items.
  2. Verify the Credit from line 55 of prior year Schedule I: $27,572.

Estimates and Penalties

Payments and Extensions

  1. Select Payments and Extensions > Estimated Tax Paid.
  2. Enter estimated tax payments of $6,900 in Payment 1, 2, 3, and 4.

Estimated Tax Payments

  1. Select Estimates and Penalties > Estimated Tax/Overpayment.
  2. Verify the 2019 tax liability (safe harbor estimate).
  3. Scroll down to Application of Overpayment > Overpayment Option.
  4. Select the option to apply to first and second installments and refund any excess.
  5. Select the Overrides tab.
  6. Enter NONE in the first three quarters of estimated tax vouchers.

Underpayment Penalty

  1. Select Estimates and Penalties > Underpayment Penalty.
  2. Select options from the first two list boxes:
  3. Select the option to suppress the penalty calculation and not print the form.
  4. Select the option to sort the Form 2210 with the tax return only when the Form 2210 is required to be filed.

Transmittal Letter and Filing Instructions

  1. Select Letters and Filing Instructions > General Options.
  2. Verify that the correct IRS Service Center for Florida is Ogden, UT. This should be selected automatically.
  3. Verify that the option to print Filing Instructions and Transmittal Letter only is selected.

    The Walton Trust requires separate federal filing instructions and a transmittal letter to the fiduciary. Estimate filing instructions are not required. Note that the default for Transmittal and Filing Instructions Preparation is for all letters.

    Most of these items will flow automatically in a client’s real account and are set up by the Firm Administrator, so no entries in this Organizer are usually required.

Clients can use the procedure outlined above to override the account defaults on a return-by-return basis.

 

 

 

Case Study Facts/walton_data_entry.htm/TY2019

Last Modified: 03/19/2020

Last System Build: 06/17/2021

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