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October 30, 2023
Question

Iowa Trust

  • October 30, 2023
  • 1 reply
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For an Iowa Iowa simple trust can you transfer depreciation from cash to principle if the Will states no reserves are allowed and Net income must be distributed?   What if the trust took all the depreciation and none of the depreciation was shared with the beneficiaries who received a distribution?. No depreciation was ever entered on the K-1.   Does that mean the trust kept a reserve?

1 reply

Employee
October 30, 2023

Depreciation is apportioned between the beneficiaries and the trust in accordance with the pertinent provisions of the terms of the trust.

 

In the absence of any provisions in the trust, then the depreciation deductions are allocated on the basis of trust income.

 

See Section 167 and the Regs thereunder.