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Irrevocable trust that is an LLC

I have vacation rental property that is owned by an Irrevocable trust.  It was recently setup as an LLC. It is a single member LLC.  I am the initial member and our agreement states the taxes can be filed as a sole proprietorship.  How should I file tax returns in Massachusetts.  There was a very small profit this past year.   My tax person did not add it to my personal return and we've already received our personal refund.  He also said I could file the return without penalty even though he did not file an extension.  Your help is greatly appreciated.  I'm

2 Replies

Irrevocable trust that is an LLC

Does the trust file a 1041? How is it that the trust is an LLC? Need more details.

Irrevocable trust that is an LLC

under the tax rules it is a grantor trust (because you are the grantor and control the trust assets and are currently the beneficiary).  about the only purpose the trust serves is to designate who inherits the property when you die. a grantor trust is a disregarded entity.  if it has its own EIN then the tax laws require it to file a grantor trust return every year. you as the grantor/beneficiary then report all the income and expenses on schedule E of your 1040 as if the trust did not exist.  if it doesn't have its own EIN  then no tax filing is required for it and you report the same way on your 1040 - schedule E as if it does not exist. single-member LLCs are also disregarded entities.  your tax person should have reported the rental on your return. 



schedule C  would only be appropriate if you rendered significant personal services to the renters like a B&B

if you filed without reporting the income, you now need to file an amended return.  if you paid to have it prepared, the tax person should amend it for free and also be responsible for any penalties and interest.

and if a trust return was required the tax person should also pay any penalties for the late filing. 


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