Question

Filing LLC tax return when one of the members is a trust that has 3 members

Forum|Forum|5 years ago
March 8, 2021
2 replies
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one of the members of the LLC is a trust that has 3 members, all equal owners of the trust. Do we need to declare each member of the trust as as an owner of the LLC? so turbotax will issue a k-1 to each individuals SSN?

Or do we add the trust as an owner/member? and if so, since turbotax will only issue 1 k-1 in that instance, how does each individual declare it on their tax return?

TurboTax Business Windows

A

Anonymous_

Employee

@yodankful wrote:
Or do we add the trust as an owner/member? and if so, since turbotax will only issue 1 k-1 in that instance, how does each individual declare it on their tax return?

Add the trust as a member. The trustee of the trust will then report the K-1 from the LLC on the trust's income tax return (Form 1041) and, in turn, the trust will issue each beneficiary a K-1.

Y

yodankfulAuthor

Okay so filing the returns but the trust type is a Grantor Trust, not a simple trust. So the Grantor Trust does not issue schedule k-1s but does send the share of income across each Grantor. How can each grantor now declare this income from the Grantor Trust on their Individual tax returns without the k-1?

A

Anonymous_

Employee

@yodankful wrote:

How can each grantor now declare this income from the Grantor Trust on their Individual tax returns without the k-1?

A grantor trust would issue a GIS (grantor information statement, aka grantor letter) which details all items of income, gain, deduction, credits, etc.

N

npierson777

You need to issue Form K-1 to each member of the LLC, regardless if they are individuals or entities. Then it is members' responsibility to report that income or loss on their tax returns. In you case, the trust will issue their K-1 to their members.