TX Business for trust return shows depriciation of rental units correct but zeros dep' for income calculation. Is this a bug?

[aviedel1]

When I enter rental property information it calculates profit correctly with the depreciation cost included. When I calculate total income for distribution out of the trust it eliminates all depreciation and generates much larger income. In the PDF printout dep is also zerod out. 

[tagteam · Accepted solution]

"TX Business for trust return shows depriciation of rental units correct but zeros dep' for income calculation."

The default for the software is to pass through depreciation to the beneficiary(ies). If you look at your K-1(s), you should see your depreciation on Line 9 with a "A" code (directly apportioned deductions).

You can change this default position in Forms Mode directly on Schedule E (see screenshot).

[aviedel1]

Thank you - if depreciation is transferred to beneficiary does that mean it will not reduce the basis for trust gains when asset is sold? In which case how would that be accounted for in the K1 when its sold?

[tagteam]

It really depends, but that would typically be passed through to the beneficiary(ies) as unrecaptured section 1250 gain on the K-1(s).