My parents have an LLC for rental property that files a 1065 partnership return. Both held interests through revocable trusts; however, Dad (1% interest) passed away during the year so I understand that his trust becomes irrevocable on the date of his death and requires an EIN which we have. However, I'm unsure what happens with the income (loss) for the year and his capital account. I presume the LLC will have 3 K-1s - one for mom, one for dad's revocable trust, and one for his irrevocable trust? Does the income (loss) get split pro-rata between the revocable and irrevocable trusts? Is the interest deemed to be transferred to a new partner? What goes on the K-1 capital rollforward for each partner and what are the implications for the revocable trust - gain or loss on the transfer? Thanks!
