topic Re: K-1 (1041) and Materially Participated Farm Income in State tax filing

K-1 (1041) and Materially Participated Farm Income

SimonGeorgia — Wed, 08 Oct 2025 04:15:05 GMT

I am one heir amongst others to a farm. I received a K-1 (1041). I very much, materially participated in the farming activities. I want to report these farming activities as a "self employed." I found this, "If you materially participated in a farm business and received a Schedule K-1 (Form 1041) from an estate or trust, you must report your star of the income on Schedule F (Form 1040)." Am I not also suppose to report this on Sch E, pt2? When I do both of these, it doubles my farm income.

My job is this farm. Just so happens that I am compensated through a 1041 K-1. I need to file this as self-employed income for health policy and investment reasons.

Thank you

Re: K-1 (1041) and Materially Participated Farm Income

Hi Palms — Wed, 08 Oct 2025 05:02:19 GMT

This is a problem. You cannot file it as self-employment income if you're getting a K-1 from an estate or trust. It should be reported on Sch F by the estate or trust and that flows through to box 6 on your K-1. Then you report it on Sch E as ordinary income but not subject to self-employment tax. The trust or estate may "materially participate" but not you because you're a beneficiary. The upside is you don't have to pay self-employment tax on the income.

Re: K-1 (1041) and Materially Participated Farm Income

SimonGeorgia — Tue, 14 Oct 2025 05:20:24 GMT

Ok then. I understand the linear thinking, but there has to be or should be another way. If there is no way to place my participation or compensation of or from the estate under the guidelines of self employment, then may I recoup my loses through Schedule 1 Part 2 Line Z? I was truly hoping for the earned income out of this K1.

On Line Z, under "Other adjustments. List type and amount," I could put "list type" as "Broke *ss fiduciary brother won't do his job."

Thank you and Turbotax for all your help. As you can see, my situation is a sticky one, and you and your program have helped me tremendously. I am just filing the forms I need to with ease.

Re: K-1 (1041) and Materially Participated Farm Income

Hi Palms — Thu, 16 Oct 2025 00:20:11 GMT

I was truly hoping for the earned income out of this K1.

Understood, but you can't do it with this structure.