Form 1041, reporting a no-cash deed transfer of rental condo to the single trust beneficiary

Forum|Forum|3 years ago
March 26, 2023
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As trustee of an irrevocable trust, and as allowed by the trust, I completed a discretionary no-cash deed transfer to the single beneficiary of the trust. The property is a condominium that has been, and likely will continue to be a rental property. My expectation is that the trust will not pay capital gains because of the transfer, but that the original cost basis will pass through to the beneficiary. Notation was made on the deed to verify the no-cash transfer. How do I report/note the transfer on Form 1041? I do expect to pay depreciation re-capture, how do I enter that?

Best answer by Anonymous_

@tax1357e wrote:

How do I report/note the transfer on Form 1041? I do expect to pay depreciation re-capture, how do I enter that?

Unless there is something extremely unusual, the transferee (beneficiary) will take the trust's adjusted basis (which includes accumulated depreciation).

Basically, there is nothing to report in this scenario in terms of the distribution of the condo to the beneficiary.

Anonymous_Answer

Employee

@tax1357e wrote:

How do I report/note the transfer on Form 1041? I do expect to pay depreciation re-capture, how do I enter that?

Unless there is something extremely unusual, the transferee (beneficiary) will take the trust's adjusted basis (which includes accumulated depreciation).

Basically, there is nothing to report in this scenario in terms of the distribution of the condo to the beneficiary.