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11Buster
Level 5
December 20, 2022
Question

CA refund on form 1041

  • December 20, 2022
  • 1 reply
  • 14 views

Anyone know why Lacerte program shows "full amount" of a prior year state refund as other income this year on line 8, even though the state tax deduction was limited in the prior year due to SALT limitation (10k)?  Maybe a 1041 is computed differently than a 1040?

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    1 reply

    sjrcpa
    sjrcpa
    Level 15
    December 21, 2022

    A 2022 return? It's too early to expect accuracy.

    Is there a Diagnostic telling you the program does not apply the tax benefit rule?

    The tax benefit rule applies to a 1041, too.

    The more I know the more I don’t know.
      1
      11BusterAuthor
      Level 5
      December 21, 2022

      Someone addressed this in a Lacerte forum in August 2021 mentioning that Lacerte back them was including the full amount of state refund, regardless of the SALT limitation. When I look at a certain trust return in 2020 with a $14k CA refund, yet only $10000 was deducted on line 11 of the 1041, the full amount of $14k was proforma'd on the 2021 form 1041, line 8 and we missed it.

        sjrcpa
        sjrcpa
        Level 15
        December 21, 2022

        I thought there was a Diagnostic or Alert for that last year.

        The more I know the more I don’t know.
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