Have living trust own SMLLC that holds rentals Used Home and Business desktop download version to do 2021 tax How can change from Individual to Trust in CA 568 form?

[attran1]

In CA form 568 right before signature section, there is a question on "the ultimate owner of this SMLLC."  I enter all rentals in the Business section.  I enter the LLC in CA section.  TT automatically choose (1) Individual.  In my case it should be (4) Estate/Trust.  Is there a way to select choice 4?

[DaveF1006]

No. You are trying to file a 1040 Schedule C return and you need to file a 1041 Trust return. These are two different products. You need to purchase a Turbo Tax Business product to file a 1041 Trust return. You can purchase a download here.

[attran1]

Hi Dave,

My trust is a grantor trust and uses my social number.  It is a pass through entity.  Do I still have to file the 1041 Trust return?

Anthony

[PatriciaV]

A grantor trust is ultimately owned by an individual and generally does not file a Federal Income Tax return.

On California Form 568 under Single Member LLC Information and Consent, use your Social Security Number and check the box for (1) Individual. You may include the title of the trust under Sole Owner's name and use the title of Grantor.

[attran1]

Thank you Patricia.

Just want to confirm. 

What I have done is correct then (filing rentals under business section)?

I don't need to buy the Business package to file any extra forms?

Anthony

[attran1]

I have not heard a reply to my message.  So I have to hire a CPA to do my tax.  She uses Schedule K from Form 568.

This Turbo Tax version doesn't produce this schedule.  Is it safe to say that I have I have an LLC, I should be using the Business version so that I have all the necessary forms?

[PatriciaV]

It sounds like you elected to be treated as a Partnership. According to the State of California, "An LLC that has elected to be treated as a partnership for tax purposes uses Schedule K‑1 (568), Member's Share of Income, Deductions, Credits, etc., to report your distributive share of the LLC's income, deductions, credits, etc."

In this case, you would need to prepare and file both Federal and a State Income tax returns using TurboTax Business. Then you would include the information from Schedule K-1 on your personal 1040 tax return.

[attran1]

Hi Patricia,

I have sold one of my rental which makes my LLC earn more than $250K.

With the Home and Business package, the gain on the house sold doesn't show up on Schedule IW Line 14 California 1231 gains.  This is the problem.

Anthony

[PatriciaV]

Please clarify if you are entering Schedule K-1 for your LLC in your personal return. If so, what box(es) on the K-1 reports the gain from the rental sale?

[attran1]

On schedule K, I see line 2 and line 10 a and b filled out.

[PatriciaV]

It appears you are entering this information under the wrong TurboTax topic. Schedule K-1 from your LLC should be entered under Personal >> Business Investments and not under Business >> Business Income and Expenses. 

The Federal K-1 information flows to your California return as a Partnership K-1 that needs to be reviewed under State Taxes as "income that California handles differently". Entered and reviewed correctly, the K-1 income flows to California Form CA and then to Form 540.

Schedule IW is the LLC Worksheet for Federal Schedule C, not Schedule K-1.

[attran1]

Hi Patricia,

I am so confused.  Let's reset everything.

I have a few rentals under an LLC owned by a trust.  I am the trustee.  It is a simple trust.

I am using Home & Business edition.  I enter all rentals income into the Business->Rental Properties and Royalties (Sch E).  On that section, I indicated that I sold one of my rental which automatically shows up in Business->Less Common Business Situations->Sale of Business Property.

What is the magic to get the income shows up on line 14 of Schedule IW?

Thanks,

Anthony

[PatriciaV]

Please confirm that 1) you have reported this Schedule C as an SMLLC and 2) have form LLC Income Wks in your list of forms.

If you're using TurboTax Online, you can see your forms list by going to Tax Tools in the left column. Select Tools, then Delete a Form. You won't delete anything, you are simply looking for the form mentioned above.

If you want to print the forms in your return before filing, you need to pay for TurboTax first, then you can download your return in PDF format.

[attran1]

Hi Patricia,

I am using the download version.

I click on "Open Form" button.

Searching on "Schedule C", I can see the form Schedule CA, Section B Lines 3, 5, and 6.  On that form I see my rentals in Section B, Line 5.

Searching on "LLC Income worksheet", there are none created.

Then I click on "Print Center" and output all forms, I cannot find the form Schedule CA, Section B Lines 3, 5, and 6, but I see LLC Income worksheet  Form 568 schedule IW.

Anthony

[PatriciaV]

During the California State interview, did you make any entries or adjustments from the Form 568 Schedule K-1 (California K-1)? 

You can check this by opening Form 568, p 3-5, and scrolling down to Schedule K Line 10a. This form will take manual entries for boxes that turn blue when you hover. As long as the numbers you type aren't red and the form doesn't have a red exclamation mark, your entry is acceptable.

Note: Schedule IW (LLC Income Wks) Line 14 (CA 1231 gains) comes from Form 568 Sch K Line 10a, which reports Sch K-1 Section 1231 Gains/Losses. Although you sold a rental property, the gain/loss is related to Sch K-1.