How to get Sec 179 on grantor letter in Lacerte

Taxpayer owns S Corp through grantor trust. The S has always given the K-1 to the trust, the trust files a 1041 and gives the beneficiary a grantor letter laying out the income to be picked up on 1040.

The S Corp wants to take around $50K in Sec 179 but I don't see how to run this through the grantor trust in Lacerte. In other words, the K-1 export is not picking it up and I don't see an input box to get the 179 on the grantor letter.

I believe Sec 179 should run through the grantor trust and land on the 1040. Am I missing something?

Thanks

Why is the S-corp not using the client's SSN on the K-1? As a general rule, an S corp can't have a trust as a stockholder. And why not use the optional reporting method and skip filing the 1041?

In all seriousness, Lacerte may be assuming that nobody would be doing what your client has you trying to do.

I have a situation like that. I don't know exactly why we file it the way we do, but it was blessed (before my time) by the colleague I trust most with trusts (and I know there's some research somewhere in the file), so I believe it's appropriate to do this way (albeit, yes, uncommon).

We use pro fx, and there isn't an actual input for the Sec 179. We use an "other information" input field which adds to the grantor letter. Input the description "Tentative Section 179 Expense Deduction From S Corporations" with the amount.

Last year I had to use other information to get a 1099R on a Grantor Letter. This year I nomineed all 1099s from the trust to the client.

You have to be careful with these. Not all grantor trusts qualify as S shareholders absent special election. (Typical living trust
yes, typical IDGT no). If a grantor trust does not definitely qualify as a Subpart E trust so that all the income or income allocable to corpus is deemed owned by the grantor (or another person pursuant to Section 678), the trust will cease to be an eligible shareholder.

See §1361(c)(2)(A)(i).

My views on the ability of software to do trust returns have not changed. In this case there has to be a box to check telling the software under what provision the trust is a qualified S shareholder. If yes you hopefully will get another set of input screens. If not you have to override or attach a statement containing the required information.

Thanks everyone.

The trust document includes an election filed with the Treasury stating it's a QSST under Code Section 1361(c)(2)(A)(i) so I believe everything is on track.

I've been checking all the boxes in Lacerte indicating a QSST grantor trust but it's not opening up additional input screens. I guess I will need to manually override to include the 179 in the letter.

Thanks again, very helpful

Oh dear. I hope you are aware that in the case you are describing the income required to be distributed is financial accounting income as determined under your state's UPIA not taxable income. §179 would likely not apply.

Here's what the election says:

"Trust elects, under 1361(d)(2), to treat the Family Trust as a trust described in code section 1361(d)(3), which under code section 1361(d)(1)(A) shall be treated as a trust described in code section 1361(c)(2)(A)(i), with respect to the stock held by trust, an S corporation."

So no 179?

OK. You have an election, you have to follow the rules. Do some reading and do not expect your software to get it right...♫

Thanks for your help Dennis, really appreciate it. I often find trust agreements difficult to understand.

It looks like I really do have a QSST because the the next sentence in the election says:

"The Family Trust is a qualified Subchapter S trust (QSST) within the meaning of Code Section 1361(d)(3)."

I take it that means no 179 but I will do some more reading

Too many complications to offer help. Hopefully the S Corp made distributions. Do not be surprised if the trust is a taxpayer.
The QSST is a separate share.