real estate distribution in a complex trust

[esctan]

A complex trust that has been paying tax on trust level is distributing a piece of property to one of the two beneficiaries. Lacerte will not show the distribution amount on schedule B unless current income is distributed to this Beneficary. Does this mean that current year income has to be allocated to beneficiary who receive the property?

[PhoebeRoberts · Accepted solution]

Distributions by definition carry out distributable net income. If the trust document permits or requires "separate shares" accounting, you'll want to maintain a side schedule for the things that aren't prorata.

[esctan]

Thank you, Phoebe.

[esctan]

Sorry, I need more help. This complex trust has 2 beneficiaries 50/50. Basis of distributed real property   ($300K+) , which is way in excess of distributable net income (DNI), should the DNI ($36K) be allocated to both beneficiaries 50/50 or just the recipient of the property for 100%?

[sjrcpa]

Did the other beneficiary get any distributions?

[esctan]

One beneficiary gets a rental property, the other one gets nothing for now.

[sjrcpa]

Then only the one who got the property gets the income.

[esctan]

Thank you, sjacpa.

[esctan]

Hi sjrcpa:

Will the following detail make a difference? There were 2 rental properties in this complex trust. Bene #1 got one rental and turn into his principal residence. The only income from this trust is rental income from the remaining rental.  Should I allocate all the $30K rental income to this bene #1? Thank you for your advise. 

[sjrcpa]

Yes, based on your pervious statements that this beneficiary received a property distribution and the other beneficiary received -0-.

[esctan]

Hi sjrcpa,

I am still confused. Is the "yes' refers to the fact pattern change that the distribution should be 50/50 or "yes" to "allocating all rental income to bene #1" as he gets the only distribution this year and bene #2 get $0 for now. I think the complex trust will go on for years to come. Thank you for your help.

[sjrcpa]

Yes all income to  beneficiary #1 who got the property distribution.

[esctan]

sjrcpa, thank you very much for your kind help!