Buggy Trust 1041 Tax Software when generating a K-1 for an Inherited IRA
I am using H and R Block tax software to generate a 1041 K-1 for an Inherited IRA Distribution. When I fill out Line 5 – Other Portfolio and Nonbusiness Income ($40,000) for the Inherited IRA distribution then the software is automatically filling in Line 14 Other Information with Code E – Net Investment Income ($40,000) and Code H – Adjustment for Section 1411 Net Investment Income or Deductions (-$40,000). This doesn’t make sense to me and I think it’s a bug in the software! When I use the K-1 including Line 5 and Line 14 codes E and H in the 1040 Tax software there is a warning message that Codes E and H are unsupported. The Box 5 $40,000 gets transferred to Schedule E as I expected. I really think it’s a bug with the 1041 K-1 software and codes E and H should not have been used for an IRA distribution. What do you think? Maybe my biggest mistake is using H and R Block software instead of TurboTax!
Permalink Submitted by Norman Cook on Mon, 2025-01-27 13:43
I used H&R Block business for my trust account 1041 last year. I found several bugs in the software and spent a few hours talking to H&R Block technical support. Technical support was very helpful; however, it was clear to me that there 1041 program was not fully supported and was more or less for very simple 1041’s. They did send me a free copy this year. I have not used it yet because I do not have all the 1099s from my trust account yet. I hope this year’s 1041 has improved somewhat. If not I again will have to buy TurboTax 1041 for my trust. It works well; however, I am unhappy with some of the changes that it TurboTax has made with their registration procedures.
I suggest that if enough of us complain to H&R Block technical support maybe they will improve the program.