From schedule e rental to grantor trust rental

Forum|Forum|4 years ago
January 14, 2022
2 replies
19 views

We have been filing our two rental properties on our personal return. We have transferred our rentals to a grantor trust. Do we now have to “dispose” of each depreciable item and close out the schedule E? When I tried that I created a huge loss.

I know that I need a K1 for reporting income and expenses but how do I calculate depreciation for the K1?

Thank you

ProSeries Professional

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J

jeffmcpa2010

Level 10

I would start with asking the attorney who created the trust's to find out if they are trusts which need to file their own return.

A lot of grantor trusts (think living trust) are in my experience transparent for income tax purposes.

T

tiellamoAuthor

Level 2

Thank you, I have asked the attorney and he said a 1041 will not need to be filed as the reporting will go from a k1 to our personal return. Grantor trusts from what I have learned are reported this way.

sjrcpa

Level 15

If "a 1041 will not need to be filed " there will not be a K-1.

The more I know the more I don’t know.

sjrcpa

Level 15

If the trust will file a tax return, on the 1040 you stop depreciating them as of the date of transfer.

This is not a gain or loss situation.

If the trust is disregarded for income tax purposes you leave everything the way it is.

The more I know the more I don’t know.

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