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Grantor, Irrevocable Trust - Rental Prop, Depre

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New Client.  Needs me to file her Irrevocable Trust return which has rental property.  After reading the trust documents, I reached out to the lawyer and confirmed it's a GRANTOR, IRREVOCABLE trust.  A unique setup done for Medicaid purposes I'm told.  Fine.  

I have to file a 1041, but for informational purposes only.  Then, the grantor is given a 1041 Grantor Trust information form to include the rental income & expenses on her personal return.  

When I complete the return in ATX, it's not flowing the deprecation through to the information form.  I've research this and do see where Sec 179 is not allowable on trust returns, but I don't see where SL depreciation is disallowed.

Because the return is really just an information return, am I to exclude the 4562 from the 1041 return, and only include it on the 1040 personal return of the grantor?  Or perhaps include a copy of the 4562 with the 1041 Grantor Trust Info form?  Or perhaps the deprecation somehow disallowed?  

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On 7/28/2020 at 5:36 AM, GGRNY said:

I've research this and do see where Sec 179 is not allowable on trust returns, 

For a grantor irrevocable trust, I believe it depends on the language of the trust.

As far as depreciation goes, it is a separately stated item on the K-1 and off the top of head don't recall how it flows with ATX.

On 7/28/2020 at 5:36 AM, GGRNY said:

I have to file a 1041, but for informational purposes only. 

For some grantor trust there are options for filing a less than complete 1041, not on top of my head either. 🤔

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On 7/28/2020 at 5:36 AM, GGRNY said:

When I complete the return in ATX, it's not flowing the deprecation through to the information form

I looked at a 1041 with depreciation.  It flowed to LIne 9 of the K-1 with code A for depreciation.

 

On 7/28/2020 at 5:36 AM, GGRNY said:

 do see where Sec 179 is not allowable on trust returns,

179 is allowed for grantor trust since the grantor and the trust are treated as the same entity for income tax purposes.

If the attorney has confirmed that the trust is treated as a grantor trust for tax purposes, then section 179 should be allowed.

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On 7/31/2020 at 1:40 AM, DANRVAN said:

For a grantor irrevocable trust, I believe it depends on the language of the trust.

As far as depreciation goes, it is a separately stated item on the K-1 and off the top of head don't recall how it flows with ATX.

For some grantor trust there are options for filing a less than complete 1041, not on top of my head either. 🤔

HI Dan, 

Thanks for the reply.  Given there's no K-1 for this kind of trust (the Grantor is given the 1041 Grantor Information form), I was able to find an old forum discussion about 1041s and JKLCPA mention this area of the Fixed Assets data entry that corrected the depreciation not flowing in my 1041 return.  I'm adding it to this discussion so hopefully it helps someone else in the future.  Thanks DANRVAN & JKLCPA for your assistance. 

image.png.8e9f1519ef73a620b682b572c9b7778f.png

 

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