Trust Farm Land Rental

[tax2016sdk]

I am the Fiduciary of a Complex Trust that rents out land in the trust to another farmer for farming.  Tax return was done by professional tax prep since 2021 and decided to try to do it myself with TurboTax Business.  I completed the 1041, Schedule E to generate the six K-1's for the beneficiaries of the Trust.  TurboTax is treating the income on the K1 as line 5 verses the tax professional has it on line 7 (Net Rental Real Estate Income).  I've followed the 1041, Schedule E, Form 8582 from the prior years returns and they look exactly the same.  Not sure what I am missing.  Everything looks the same as the prior years tax returns except the K-1 classification on line 5 by Turbotax verses line 7 from tax professional.

[tax2016sdk]

No reply here on the community.  I've sent the file to an agent via the software and the number is.  Please review and advise regarding issue.

[DianeW777]

The income should be rental real estate as you indicated. This change can be done by using Forms mode, then moving the number from Line 5 to Line 7.  It doesn't change the 1041 itself and only the K1s would be edited before filing with the IRS and the beneficiaries. 

[tax2016sdk]

Move it on what form?  I can't move it on the K-1 Worksheet - can't delete row 5  I can add to row 7 but now its on row 5 and 7 on the K-1.  Can't move it on the K-1 as I can't delete row 5

[PatriciaV]

Non-passive income is reported on Line 5. Line 7 reports Passive Income, which is appropriate for rental activities. The net income from Form 1041 is automatically allocated to the K-1s. There is no way to change this. While you can manually override the numbers on Schedule K-1, this would invalidate the return for e-filing.

You may need to contact the previous tax preparer for more information on how this income should be reported.

[tax2016sdk]

While your reply is factually correct, TurboTax for Business does not handle it the way it should and in two weeks, I have not gotten anyone to test it and advise TurboTax has an issue that needs to be corrected.