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This is the initial year of a decedent's trust with 5 beneficiaries sharing equally. The decdent has had land rent for years, no expenses other than property taxes. There is nothing to manage. Clearly a passive rental. The rent is reported on Schedule E as Land, and flows to Line 5 of the 1041, Rents, royalties, etc. On the K1's it is not showing up on Line 7 where I would expect it as net real estate income, but is on Line 5 as non passive other portfolio and nonbusiness income. I must be missing something, but I don't know what?
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Rent from unimproved land has a special carve-out. Here's an article that popped up when I googled:
The example in the article is for a parking lot but the rules also apply in other areas.
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Thank you! There is always something new to learn; I had no idea.
Appreciate you taking the time.
