My first time with Turbotax "Business." Mom (as "grantor") deeded her Kentucky farm into an Irrevocable, Income-Only Trust, for which I am the trustee. She relies on annual rent paid by a tenant farming operator there, so we enacted an "income-only" trust to allow me to pass the rent money through the trust to her on a K-1.
My understanding was that I would receive the rent from the tenant, deduct expenses to be paid by the trust (such as property tax, banking fees and other miscellaneous expenses), then pass the remainder on to her. She would then be responsible for claiming the income declared on the income on her personal tax return. I've devised it so that there are practically no funds left in the trust itself, following the above deductions and the K-1 passthrough to her. However, the Turbotax software then informs me that I must file state returns both in Kentucky and New Mexico (where we both reside). Further complicating matters is that Turbotax does not make available a state tax return that I can pick off. Must I really even file with either state when there's practically no money left in the trust itself?
