Question

Rental Properties held in an irrevocable trust- Does Do expenses and Depreciation come off at Trust return? or transferred to beneficiaries?

Forum|Forum|1 year ago
March 21, 2025
1 reply
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Question just to get my head around it before starting the trust return.

Mother died and left all rental real estate in a living trust which is not irrv after her death.

3 Beneficiaries split the income from the rentals

Are expenses and deprecations taken out on the trusts 1041 return level?

Is just the "net rental income " passed down to the beneficiaries? Or are the beneficiary's share of expenses and depreciation reported down to their personal returns along with the gross income?

Thanks

TurboTax Business Windows

D

DianeW777

Yes, the expenses will come off of the rental income on the trust return. The net profit will be passed to the beneficiaries through the K1.

Line 5—Rents, Royalties, Partnerships, Other Estates and Trusts, etc. -

Use Schedule E (Form 1040), Supplemental Income and Loss, to report the estate's or trust's share of income or (losses) from rents, royalties, partnerships, S corporations, other estates and trusts, and REMICs. Also use Schedule E (Form 1040) to report farm rental income and expenses based on crops or livestock produced by a tenant. Enter the net profit or (loss) from Schedule E on line 5. See the Instructions for Schedule E (Form 1040) for reporting requirements.

If the estate or trust received a Schedule K-1 from a partnership, an S corporation, or other flow-through entity, use the corresponding lines on Form 1041 to report the interest, dividends, capital gains, etc., from the flow-through entity.

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