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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] You've got it (nt) Posted by Ward-CA- on May 23, 2003 at 8:44 PM In Reply to: Re: Use a partnership return. posted by Erick on May 23, 2003 at 2:51 PM : : : : I'll be setting our first trusts this year but want to make sure I know how to handle the taxes beforehand. How is the IRS informed about the income or losses that a trust is entitled to. For example, if a property is in a trust that has paper losses for tax purposes, how does this flow through to the beneficiary's 1040? : : : I believe that the beneficiary just reports it on his own 1040 (and sched E?). : : : Now, that's just if there is a single beneficiary. To make it a little more interesting, some of our properties that are in trusts have a 3 member LLC as the beneficiary. Does the trustee send give the LLC a 1099 or something like that? Does it matter whether or not the trust has it's own taxpayer ID? : : : Now, what if there are 3 different beneficiaries (as opposed to an LLC as the beneficiary)? Do all of these scenarios make sense? Are there different treatments for each?? : : : Thanks a lot. : : : : =•=•=•=•=•=•=•=•=•=•= : : Erick, : : A trust is exactly like a partnership, wherein all profits and losses flow through it like a conduit to the individual taxpayer/partners in proportion to their representative share of the overall owners’ interest. : : We actually file a limited partnership return for those trusts where we have outside investors involved. If we don’t have any outside investors involved on a particular property then we just report it on our personal income tax return. : : Thanks Ward. : And a partnership uses form 1065 for its return. So the trustee would send form 1065 to the IRS and issue a K-1 to each beneficiary? Right? : And then, if the LLC itself is the only beneficiary then I guess the income would flow through to the LLC and the LLC would include it amongst it's other income and aggregate it with the K-1s that get sent out to partners. : Do I have this correct now? : Thanks Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : : : : : I'll be setting our first trusts this year but want to make sure I know how to handle the taxes beforehand. How is the IRS informed about the income or losses that a trust is entitled to. For example, if a property is in a trust that has paper losses for tax purposes, how does this flow through to the beneficiary's 1040? : : : : I believe that the beneficiary just reports it on his own 1040 (and sched E?). : : : : Now, that's just if there is a single beneficiary. To make it a little more interesting, some of our properties that are in trusts have a 3 member LLC as the beneficiary. Does the trustee send give the LLC a 1099 or something like that? Does it matter whether or not the trust has it's own taxpayer ID? : : : : Now, what if there are 3 different beneficiaries (as opposed to an LLC as the beneficiary)? Do all of these scenarios make sense? Are there different treatments for each?? : : : : Thanks a lot. : : : : : : =•=•=•=•=•=•=•=•=•=•= : : : Erick, : : : A trust is exactly like a partnership, wherein all profits and losses flow through it like a conduit to the individual taxpayer/partners in proportion to their representative share of the overall owners’ interest. : : : We actually file a limited partnership return for those trusts where we have outside investors involved. If we don’t have any outside investors involved on a particular property then we just report it on our personal income tax return. : : : : Thanks Ward. : : And a partnership uses form 1065 for its return. So the trustee would send form 1065 to the IRS and issue a K-1 to each beneficiary? Right? : : And then, if the LLC itself is the only beneficiary then I guess the income would flow through to the LLC and the LLC would include it amongst it's other income and aggregate it with the K-1s that get sent out to partners. : : Do I have this correct now? : : Thanks Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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