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Trust disbrituion of sale proceeds in-kind

Forum|Forum|2 years ago
April 8, 2024
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IF you have a simple trust that sells farmland do you report the total gross sale on your return.

Some received their proceeds in cash and the other received proceeds "in-kind"

Will says may opt to take "sale proceeds" in kind.

Do you only have to report the cash portion and only have depreciation recapture on that?

I would think you would have to report the entire sale because it wasn't a direct distribution from the trust.

It was a real estate transaction "sale" then the proceeds were distributed.

Thank you!!

Best answer by M-MTax

There is no such thing as sales proceeds "in-kind". The trust could have distributed the farmland or sections of it and that would be "in-kind" but instead the trust sold the farmland. You now have a situation where the trust needs to report the sale along with the depreciation and then report the distributions of any gains on K-1s for the beneficiaries.

M-MTaxAnswer

There is no such thing as sales proceeds "in-kind". The trust could have distributed the farmland or sections of it and that would be "in-kind" but instead the trust sold the farmland. You now have a situation where the trust needs to report the sale along with the depreciation and then report the distributions of any gains on K-1s for the beneficiaries.

F

Farmgirl123Author

Thank you,

The beneficiaries that took their proceeds “in-kind” so they didn’t have to put money in and take it out. They were purchasing the land. The entire piece of land was sold. Don’t you have to report the entire sale price in the gross proceeds or do you only report the proceeds for the cash portion? Seems to me that since this was a sale of the entire farm from the trust that you would have to report the entire sale price no matter how the proceeds were distributed. That way you would have to report any depreciation recapture and capital gain on the entire sale. I wouldn’t think the irs would let you not report the sale price for the distribution of the sale proceeds “in-kind”.

Trying to find a code that explains this.