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1040 E Farmland with tile depreciation

We have a trust with Farmland with tile that is rented out.  
How do we enter the depreciation for the portion of depreciation retained by the trust on the 1040 E?  What type of property in 1b is this?  It is farmland but type 5 for land would not be depreciable.  
do you enter the land and tile separately?   Do you enter it as other?

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15 Replies
DaveF1006
Employee Tax Expert

1040 E Farmland with tile depreciation

It depends. First of all, farmland that is rented out would be recorded on Schedule F, not schedule E. To enter depreciation expenses for the tile, you would navigate to the section titled Farm income and Expenses and then locate Farm Assets as you begin preparing this section in your return.  Here is where you will enter the tile information on your return as an asset to be depreciated.

 

Preparing your return in Schedule F will clear the confusion on what type of land this is because it would be strictly for farmland.

 

 

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1040 E Farmland with tile depreciation

Thanks, Dave.

But this is a trust that cash rents out the land.   We would not use Schedule F.

How do we depreciate the tile, buildings, fences separate from the land.  The land is listed on schedule E and the rent is under it.   So what form does the depreciation and excess fertilizer go on?  Where would it show up on the government copy and how?

M-MTax
Level 11

1040 E Farmland with tile depreciation

Drainage systems have a class life of 15 years and you would enter that as an asset (Schedule E - depreciation).

 

The fertilizer would be an expense that you would deduct, probably as Supplies or Other.

1040 E Farmland with tile depreciation

Thank you.

So on schedule E, it would have a line for land  (type 5) and then a line for asset-tile (type 8-other).   Where would it show Asset?  If land is not depreciable, It wouldn't show up column?  I don't see a property type as asset?

 

M-MTax
Level 11

1040 E Farmland with tile depreciation

Are you using TurboTax? 

 

You would enter the tile as an asset, not as a property type. The program should calculate the correct depreciation figure for you.

1040 E Farmland with tile depreciation

Thank you!

I am wanting to know where would that show on a printed copy of the 1040 E?  Wouldn't it be separate from the land property?   Or would it be on another form.

 

M-MTax
Level 11

1040 E Farmland with tile depreciation

Where would what show? The tile would appear on the line for depreciation.

 

The property type would be land since that's what you're renting. The tile is basically a land improvement with a 15-year class life. That would not actually appear anywhere on your return except for the first year, where it would appear on Form 4562.

 

1040 E Farmland with tile depreciation

Thank you.

It's confusing because you enter the type of property as 5 (land), but yet you are showing the depreciation and amortization under that property type when it is not depreciable?

M-MTax
Level 11

1040 E Farmland with tile depreciation

I get that, but you have a depreciable asset used in conjunction with your land.

1040 E Farmland with tile depreciation

Thank you, so the land will just show as being depreciated on the 1040E?  

Also curious.  Can you transfer depreciation from one TIN to another TIN?   For example can you transfer from an estate to a simple trust that has a separate TIN and also transfer the basis?

M-MTax
Level 11

1040 E Farmland with tile depreciation

No, the land will not show as being depreciated. Land is not a depreciable asset. Only the tile will show a figure for depreciation on Schedule E.

M-MTax
Level 11

1040 E Farmland with tile depreciation

If you transfer the property to a related party like from an estate to a trust (same beneficiaries), then the basis, including accumulated depreciation, will transfer along with it. There will be a carryover basis unless the property is sold to an unrelated third party at FMV.

1040 E Farmland with tile depreciation

It will transfer even if it has a different tax ID number than the estate?   
Thank you!!

M-MTax
Level 11

1040 E Farmland with tile depreciation

Yes.

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