Sale of property partially owned in a Disclaimer T...
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dangwin
Returning Member

Sale of property partially owned in a Disclaimer Trust - how to record installment sale of property split 50/50 between a revocable living trust and an irrevocable disclaimer trust

My parents have a revokable living trust and their property is/was included in that trust.  My dad died in 2011 and their lawyer advised putting dad's portion of their property and assets into a disclaimer trust, with my mom as the trustee, which she did. Each year we file a 1040 for her portion of the income and a 1041 for the disclaimer portion. All interest earned in the disclaimer trust during the year gets transferred to Mom throughout the year, as instructed, and any long term capital gains stay in the disclaimer trust.  In November of 2020 my mom sold the main "homeplace" property (home plus 25 acres) where she lived from 1964 until Oct 2020 to my sister on a 10 year installment plan, and my sister paid a $50,000 down payment on the property and is making twice a month payments on that property.  They are putting half the payments into the disclaimer trust and the other half in my mom's acct, so everything is being split 50/50.  My mom also purchased a home for her to move into (in town) in Oct 2020 and this property was also split  50/50 between the disclaimer trust and her revocable living trust, the same as the property she sold, with her as the trustee of both trusts.  She wanted to pay cash for the home, so we had to sell some of the mutual funds in the disclaimer trust to cover that portion of the cost, so there are now capital gains to report and pay taxes on the sale of those funds. I cannot find how to report the installment sale of their original "homeplace" property on the Turbo Tax Business (1041) and also am wondering how to (or if I do) include the purchase of the new home she now resides in.  Has someone done this before and knows how to report this sale properly on both the 1040 and the 1041 and whether we also need to report the new (replacement home)?   We will also be filing Oregon state taxes for both of these trusts.  Turbo Tax does not provide the Oregon State tax forms for the Business (for the disclaimer trust) so if anyone has advice on filling out the sale of property on that form as well, that will also be appreciated.   Thank you in advance for any advice you can provide. 

2 Replies
martinmarks1919
Level 8

Sale of property partially owned in a Disclaimer Trust - how to record installment sale of property split 50/50 between a revocable living trust and an irrevocable disclaimer trust

You REALLY NEED a tax pro for this. TTX Biz does not handle stuff like installment sales well and does not handle OR trusts as you discovered. Probably you'd have to use forms view to complete the 6252 for the installment sale and then maybe even do some overrides from there. It's not your fault but you have complicated facts and this has to be done right or it's going to be a mess.

dangwin
Returning Member

Sale of property partially owned in a Disclaimer Trust - how to record installment sale of property split 50/50 between a revocable living trust and an irrevocable disclaimer trust

Thanks for your suggestions. We definitely should have gotten started on this sooner, didn't realize just how complicated this was going to be.  Was hoping to get this figured out for my mom.  

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