Problem with fluid and obstacles and subsurf

Alright I made my cup out of a cube by taking the top surface and making an intrusion. I then took the partially hollowed out square and made it round by using subsurf and set smooth. Then I made my domain, my fluid and set it to obstacle.

When the fluid falls into the cup, it acts as if it is falling into the square body(no longer seen) and disregards the subsurf.

Alright so fluid doesn’t support the subsurf… thats crap man… how do i create the shape i made work so it has fluid in its shape?

Just apply the modifier before baking the simulation.