Real Estate Withholding Trust Return - Spidell

Real Estate Withholding Trust Return

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Message Board Real Estate Withholding Trust Return

This topic contains 1 reply, has 2 voices, and was last updated by Lynn Freer 2 months, 2 weeks ago.

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  • #165405

    Must real estate withholding on a sale of real estate be distributed to beneficiaries on their K-1s or does the trust receive the refund on the 1041?

  • #165570
    Lynn Freer

    If the gain is passed to the beneficiary, the withholding goes to the individual and can’t go on K01
    This is from our Analysis and Explanation of California Taxes

    Passing withholding to beneficiary

    When property is sold by an irrevocable (nongrantor) trust, the escrow company completes a Form 593 listing the name of the irrevocable trust as the seller. The trustee will receive a Form 593 in the name of the trust. If there was withholding on the sale, the trust must then file an FTB Form 592, Resident and Nonresident Withholding Statement, to transfer the withholding to the beneficiary and provide the beneficiary with a FTB Form 592-B, Resident and Nonresident Withholding Tax Statement.

    Unfortunately, the current process does not allow the trust to pass through the withholding using the state withholding line on Schedule K-1.