1041 for Grantor Trust detail reporting requirements unclear

[edadave]

Using income property in a grantor trust as an example:

- Only entity info goes on the 1041 - no dollar info here.

- Grantor Information Sheet, filed with 1041, should include dollar details in same detail as would be on a Schedule E. Is this right? That's a lot of information.

- Rather than the trust issuing a K-1 to grantor, grantor's own 1040 includes all of the same detail stated again, this time in an actual Schedule E. Is this right?

- In grantor's own 1040, how is schedule E identified as coming from the trust, and should it be segregated from schedule E info for other properties that are not in the grantor trust?

[Anonymous_]

Does this trust have an EIN?

Grantor trusts are generally disregarded for federal income tax purposes.

The income tax reporting would be the same as if the grantor did not have a trust.

[Anonymous_]

See https://www.irs.gov/instructions/i1041#en_US_2021_publink1000286018

[edadave]

Thanks for the reply. Yes, the trust has its own EIN. IRS instructions are clear on most points, but not so much on the few questions I raised. Restated:

1. A 1041 needs to be filed and it needs to report income on its Grantor Information Statement, but no taxes are due with it. Rather the income is also reported on the grantor's 1040 which is where taxes are paid. Sound right?

2. Instructions say 1041 should report transactions in the same detail as in the 1040, but to not use IRS schedules B, C, D, E, etc. So just freeform on the Grantor Information Statement, all the gory details that also appear on the 1040's IRS schedules? Seems very odd.

3. Any need in the grantor's 1040 to identify income and deductions from trust assets? Some investment properties moved into my grantor trust mid-year, so wondering if I should have separate schedule E's for personal vs. trust activity.

[edadave]

Thanks. I did consult that IRS publication prior to posting here. That publication answered maybe 90% of my questions but left a few unanswered which I posted here.

[Anonymous_]

Yes, the income (from the GIS) is reported on the grantor's 1040.

Yes, the GIS contains all that is needed for the grantor to report the income on the appropriate schedules on the grantor's 1040.

The trust activity and personal activity are one in the same. They could be separated, though, in order to keep the books and records (if they are even being kept) in order.

[edadave]

Thanks - still one question on level of detail in each place. If grantor's 1040 Schedule E shows 5 income properties each with 5 categories of income and deductions, does the trust 1041 GIS need to show 5x5 or 25 different line items? IRS instructions say GIS should show same level of detail. 

[Anonymous_]

That sounds correct for that scenario, @edadave