Transfer of public partnership to revocable trust - now two K-1's but no sale

[BigBear3]

I transferred a public partnership from an individual account to a revocable trust - both use the same SSN. It was not a sale but a "transfer out" without proceeds. I received two k-1's - one showing the ending units as zero and one for the trust showing beginning units.  Turbo Tax offers some options on sale or dissolution, but none seem to fit this type of transfer. How do I handle this in turbo tax?

[Mike9241]

a revocable trust would be a grantor trust. they are supposed to issue grantor trust letters and not a  k-1s.  the front of the 1041 would have a block saying it's a grantortrust so it's possible the 1041 was prepared improperly.  a grantor trust letter merely repeats each item of income and deductions reported. and the grantor enters them the same way in their 1040.  for example, if the trust got 6 - 1099-int from different banks the letter would report interest from 6 banks and the grantor would have to enter the 6 banks and the amounts for each  in their 1040 

as a matter of fact, if the trust is using your SSN for purposes of tax reporting forms, the filing of the grantor trust may not be necessary.   everything would get reported on your 1040 as if the trust does not exist 

[nexchap]

Assuming you've always reported both the trust and your personal account on the same tax return, nothing has really changed from a filing standpoint:  ignore the transfer as far as TT is concerned, and simply sum the two K-1s together for entry into the normal K-1 interview.

[BigBear3]

• Thanks for the reply. Sounds very reasonable. The trust was created in 2022 so this is first year to report together. Since IRS gets both K/1’s will they see that I haven’t reported one?

[nexchap]

@BigBear3 If you look at the forms TT actually generate, the K-1 isn't in them.  All the IRS sees from your return is the taxable items on the K-1, so no:  they won't know how you handle the entry.  The big reason to get a "disposition" right is when it allows suspended losses to be released.  Until that happens, the K-1 entries simply populate other forms (if they impact taxes in the current year) or get suspended towards future years.