If the sale of a home for personal use was sold in a Trust and there was no gain (in fact there was a loss) where on a 1041 Trust tax return would this be shown and if the principal from the sale was distributed to Beneficiaries, likewise, where would this be shown on the tax return? Thanks!
You'll need to sign in or create an account to connect with an expert.
Principal distributions would not be shown on the K-1s to the beneficiaries.
Losses on personal use property are not deductible, nor could such losses be used to offset gain on the sale of any other trust assets.
Even though a loss on a home in a Trust is not deductible I would think that a loss or gain goes on Schedule D and Form 8949 (Sales and Other Dispositions of Capital Assets) If the 1041. Is that correct? If the principal from the home sale is distributed to the beneficiaries where does it go on the 1041? Thanks!
Principal distributions from trusts are not reported on federal income tax returns.
Even though a loss on a home in a Trust is not deductible I would think that a loss or gain goes on Schedule D and Form 8949
Yes, it is reported but the loss is not recognized.
@M-MTax You said that “Principal distributions would not be shown on the K-1s to the beneficiaries.”. But are they reported anywhere on the 1041? Thanks!
They can appear on Line 10 of Schedule B but typically are not.
Interesting… So if not on line 10 of the 1041 or not on the K-1 the IRS doesn’t care if they don’t know that the principal was distributed? That seems kind of strange since the IRS always wants to know everything 😂
Thanks.
Yeah, they don't really care because there's no opportunity for extracting money via taxation.
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
Need to know
New Member
Info4464
Level 1
mwcundik
New Member
teddyhuang
Level 1
owenisworking
New Member