Dad put 1st & 2nd home in irrevocable grantor trust. He pays $900 "rent" per month to the trust to cover property tax & insurance. Do I need to file 1041 & K-1 ?
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest second stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
New Member

Dad put 1st & 2nd home in irrevocable grantor trust. He pays $900 "rent" per month to the trust to cover property tax & insurance. Do I need to file 1041 & K-1 ?

 
4 Replies
New Member

Dad put 1st & 2nd home in irrevocable grantor trust. He pays $900 "rent" per month to the trust to cover property tax & insurance. Do I need to file 1041 & K-1 ?

Not necessarily.  You may choose to file the Form 1041 but the following AICPA article describes, in detail, alternatives to filing form 1041 for this type of trust. https://www.thetaxadviser.com/issues/2013/sep/clinic-story-03.html

New Member

Dad put 1st & 2nd home in irrevocable grantor trust. He pays $900 "rent" per month to the trust to cover property tax & insurance. Do I need to file 1041 & K-1 ?

Thanks!  This statement was included in the link .."by filing the Form 1041, the trustee is in effect letting the IRS know that the items of income or deductions are instead reportable by the “deemed owner.” The activity that is reportable by the deemed owner is summarized on a separate statement"  So do you know if that $900 per month is considered actual rental income?  If I just file a blank 1041 with a statement showing $900 per month received by the trust and show the amount of property tax and insurance that was paid , my dad would be able to deduct the property taxes on his personal return but would he have to include "rental income"? Seems confusing because it was actually money HE paid to the trust only to cover taxes and insurance? Sorry I am confused.  The trust did not have any other income or expenses.
New Member

Dad put 1st & 2nd home in irrevocable grantor trust. He pays $900 "rent" per month to the trust to cover property tax & insurance. Do I need to file 1041 & K-1 ?

The rental income reported would be the net income after the deduction for property taxes and any other expenses incurred related to the rental.
New Member

Dad put 1st & 2nd home in irrevocable grantor trust. He pays $900 "rent" per month to the trust to cover property tax & insurance. Do I need to file 1041 & K-1 ?

Oh ok.  That would be zero then.  Thank you very much for your help!
Dynamic Ads
v
Privacy Settings