InstantForum.NET v4.1.4California Society of CPAshttp://forums.calcpa.org/forums@calcpa.orgWed, 16 May 2012 17:58:21 GMT20http://forums.calcpa.org/Topic576-2-1.aspxBill's suggestion of using the K-1 to distribute the withholding to the beneficiaries could possibly work. If you do this page 24 of the 1041 instructions indicate to use Code B which is for backup withholding. If you do this you may have a problem with the amount of the distribution from the CRT. You may have to reduce the 2008 distribution by any 2007 withholding allocated.<br><br>Since this is a situation out of the ordinary it may cause some problems when the IRS attempts to fit whatever you attempt into their system. Therefore is you have the time I would suggest that you talk with the taxpayer advocates office as to the best way to deal with this situation. I would agree with Bill that the answer provided by the IRS does not sound correct. If chose to go the taxpayer advocate way please let us know what their solution is.Wed, 07 May 2008 11:32:58 GMTJohn R. Woodfordhttp://forums.calcpa.org/Topic576-2-1.aspxThis sounds wrong to me. I don't think you can make a 1041 Schedule D work out. It would compute a tax that isn't appropriate for the CRUT.<br><br>Can you force a credit out to the beneficiary, via block 13 of Schedule K-1? Let the beneficiary take the credit, and treat it as part payment of the Unitrust amount.<br><br>If you use Code A, which is supposed to be for estimated taxes, you could also attach an explanation.<br><br>Bill Downs<br>Mon, 05 May 2008 15:45:13 GMTBill