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Separate tax return for rental in irrevocable trust?

Forum|Forum|6 years ago
March 18, 2020
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Do I need to file a separate tax return for a rental property I own in an irrevocable trust?

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maybe maybe not. some trust would have to file a return and report the income. some of these trusts are what are referred to as defective or grantor trusts. if the grantor trust has an EIN it needs to file a grantor trust return. such a return would report activity in a format that the grantor would use to report the income on their own return. the trust would pay no tax. without the trust document and knowing more, can say that your's is . the IRS has about 10 or so tests to determine grantor tryst status. pass any one and it id.

one test id you own the property that's in thr trust otr are the put money into it and now control how it operates including being the trustee - grantor trust.

by the way a grantor trust without an ein? no trust return is filed, you report the activity directly on your 1040.

not sure talk to the lawyer who drafted the trust agreement.

A

Anonymous

Answer

maybe maybe not. some trust would have to file a return and report the income. some of these trusts are what are referred to as defective or grantor trusts. if the grantor trust has an EIN it needs to file a grantor trust return. such a return would report activity in a format that the grantor would use to report the income on their own return. the trust would pay no tax. without the trust document and knowing more, can say that your's is . the IRS has about 10 or so tests to determine grantor tryst status. pass any one and it id.

one test id you own the property that's in thr trust otr are the put money into it and now control how it operates including being the trustee - grantor trust.

by the way a grantor trust without an ein? no trust return is filed, you report the activity directly on your 1040.

not sure talk to the lawyer who drafted the trust agreement.

LeonardS

Yes, an irrevocable trust becomes a separate tax entity, which means a tax return will be submitted on behalf of that trust. You will need to complete and submit Form 1041 if the estate generates more than $600 in gross income for the tax year. However, an irrevocable trusts may be a grantor or nongrantor trusts and these types of irrevocable trusts are not necessarily required to file an income tax return (Form 1041).

[Edited 03/19/2020 | 4:00 pm PDT]

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Anonymous_

Employee

@12309 has the correct answer in this thread; irrevocable trusts can be either grantor or nongrantor trusts and, therefore, such trusts are not necessarily required to file an income tax return (Form 1041).