topic Fiduciary k-1 Preparation in Business & farm

Fiduciary k-1 Preparation

billm6 — Mon, 09 Mar 2026 04:35:45 GMT

I am fiduciary for a family trust owning timber land. I am preparing k-1 for the trust beneficiaries.

Should I show the beneficiary income on line 6 as ordinary income? If this is the only income for the trust, is an attached schedule still needed?

Re: Fiduciary k-1 Preparation

Anonymous_ — Tue, 01 Mar 2022 00:56:55 GMT

Is the trust carrying on a trade or business? What is the exact nature of the income?

Re: Fiduciary k-1 Preparation

billm6 — Tue, 01 Mar 2022 01:00:23 GMT

The trust owns one asset, land with timber. The timber was cut in 2021 and net proceeds from cutting paid to trust and 100% distributed to beneficiaries.

Re: Fiduciary k-1 Preparation

Anonymous_ — Tue, 01 Mar 2022 01:03:54 GMT

The sale could be considered ordinary income or capital gain.

You might want to peruse the article at the link below.

See https://smallfarms.cornell.edu/2015/07/financial-timber

Re: Fiduciary k-1 Preparation

Anonymous_ — Tue, 01 Mar 2022 01:04:40 GMT

Re: Fiduciary k-1 Preparation

Mike9241 — Tue, 01 Mar 2022 01:39:37 GMT

we know nothing about the trust and even a family trust can be treated as a grantor trust. a 1041 would still be required but rather than a K-1 each beneficiary gets a grantor trust letter.

Re: Fiduciary k-1 Preparation

billm6 — Tue, 01 Mar 2022 02:15:54 GMT

Thanks for the feedback. Are you referring to the annual Beneficiary letter that the Fiduciary normally prepares? or is this something else?

Re: Fiduciary k-1 Preparation

Anonymous_ — Tue, 01 Mar 2022 02:24:31 GMT

No. By a grantor letter @Mike9241 is referring to a Grantor Information Statement (aka Grantor Information Letter) that contains all items of income, deduction, gain, credits, etc.

The GIS is issued by grantor trusts whereas K-1s are issued by nongrantor trusts.