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Subject Author Date
Where To Report Trust Real Estate Income? William Brenner 04-04-2007
Posted by William Brenner on April 4, 2007, 3:28 pm
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 I am a beneficiary and trustee of a pass-through irrevocable
trust, the sole income of which is rent from a land lease.

Through the years, I have reported the income in Part I
(Rental Real Estate) of Schedule E with no problem; but
wonder if it would be more appropriate to report it in
Part III (Income From..Trusts)

Or does it not really matter so long as the income finds
its way to line 17 of Form 1040?

What say you?

Thanks

Bill

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Posted by joetaxpayer on April 5, 2007, 2:27 am
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 William Brenner wrote:

> I am a beneficiary and trustee of a pass-through irrevocable
> trust, the sole income of which is rent from a land lease.
>
> Through the years, I have reported the income in Part I
> (Rental Real Estate) of Schedule E with no problem; but
> wonder if it would be more appropriate to report it in
> Part III (Income From..Trusts)
>
> Or does it not really matter so long as the income finds
> its way to line 17 of Form 1040?
>
> What say you?

You need to fill out a 1041 for the Trust itself, and
there's a schedule E that belongs to the trust. The trust
issues you a K-1 which is filled out appropriately to flow
to your own tax return, your own sch E is part of your
return. It's a good idea to get it right, both to be certain
you are paying the right tax, but also to avoid an audit. I
suppose the best outcome of an audit is when you are told
"wrong boxes, but your total tax computation is correct" but
why not get it right 100% the first time? And here, it seems
you had it right anyway.

JOE

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by ed on April 5, 2007, 2:27 am
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> I am a beneficiary and trustee of a pass-through irrevocable
> trust, the sole income of which is rent from a land lease.
>
> Through the years, I have reported the income in Part I
> (Rental Real Estate) of Schedule E with no problem; but
> wonder if it would be more appropriate to report it in
> Part III (Income From..Trusts)
>
> Or does it not really matter so long as the income finds
> its way to line 17 of Form 1040?
>
> What say you?

If the trust took any deductions you would report it on Part
III because the trust used Part 1 and put the net on your
K-1, orgave you the gross and deductions to oput on Part
III. If the trust passed the income straight through to
you and there are deductions, you must use Part 1 to get
them. That is: Someone must use Part I to get deductions.

If there are no deductions, jsut ordinary lease income with
no depreciation, taxes, travel, etc, it doesn't make any
difference where you report it. Part 1 of Schedule E is
the only way to take RE deductions.

ed

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by DORFMONT@aol.com (Linda Dorfmo on April 9, 2007, 3:48 am
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>> I am a beneficiary and trustee of a pass-through irrevocable
>> trust, the sole income of which is rent from a land lease.
>>
>> Through the years, I have reported the income in Part I
>> (Rental Real Estate) of Schedule E with no problem; but
>> wonder if it would be more appropriate to report it in
>> Part III (Income From..Trusts)
>>
>> Or does it not really matter so long as the income finds
>> its way to line 17 of Form 1040?
>>
>> What say you?

> If the trust took any deductions you would report it on Part
> III because the trust used Part 1 and put the net on your
> K-1, orgave you the gross and deductions to oput on Part
> III. If the trust passed the income straight through to
> you and there are deductions, you must use Part 1 to get
> them. That is: Someone must use Part I to get deductions.
>
> If there are no deductions, jsut ordinary lease income with
> no depreciation, taxes, travel, etc, it doesn't make any
> difference where you report it. Part 1 of Schedule E is
> the only way to take RE deductions.

Fill out the 1041. You'll find that the exemption amount
will reduce the amount of rental income you have to report
through your K-1. I have had several situations like this
where the IRS has forced a client to file a 1041 for a
single distribution after the death of the owner. I hope
they are regretting it because in each situation the
survivor has ended up reporting less income on their own
1040, and paying less tax.

Linda Dorfmont E.A, CFP, CSA

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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