Trust farmland rental to beneficiaries business

[Farmgirl123]

I’m curious if our trust rents the farmland to a beneficiaries business is it considered a self rental for the trust on schedule E and subject to the self rental rules?

What if it rents to an S corp in the trust?   Self rental rule and code it as a self rental on the 1040E as well?

[Hi Palms]

Issue is ownership and conctrol. If you, as a beneficiary or a shareholder, own or control the entity, like the trust or the S corp, then if one of those entities rents to you it's a self-rental.

[Farmgirl123]

So the trust has 5 beneficiaries.  3 that are the trustees.  Renting to themselves or possibly through an s corp in the trust that they are controlling. 
What would define controlling?  Income and tax returns?

Thank you!!

[Hi Palms]

Yeah, if you're a trustee and a beneficiary and are renting to yourself or a corporation you own and control, then that would be a self-rental situation. The rule would be in Sec 469 of the Code and it just turns passive into nonpassive.

[Farmgirl123]

Thank you!,

[Farmgirl123]

And control would be at least 50 percent ownership of each?   

[Hi Palms]

50% times 2? That would be 100%.

If it's exactly 50%, then that would be less than full control of a share (i.e., you'd need 51%).