Sold Rental under living trust not LLC name - Spidell

Sold Rental under living trust not LLC name

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Message Board Sold Rental under living trust not LLC name

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    • #314746
      Anonymous
      Participant

      My client and his sister inherited a home. Each put their half into a living trust. They turned it into a rental. They opened an LLC. Prior tax preparer was reporting the rental on Form 8825 with the partnership form 1065 and 568. They did not rent the home in 2020. They also sold the home in 2020.

      The 1099 S that my client received reported his name, social security number, and his share of the proceeds. The closing papers state that the two trust sold the property.

      My question is whether I should contine to report everything on the final LLC return, even though the property was never transfered to the LLC? Or should I report the sale only on the personal tax return because the paperwork reflects a sale from a living trust?

      Am I missing something here?

    • #314749
      Lynn Freer
      Participant

      If it was still in the decedent’s living trust you can’t report on the decedent’s return but if they never put it in the LLC, they should report on partnership returns. The IRS or FTB will likely want a return and if they want one filed in the decedent’s name, provide it at that point. As far as the LLC, they should file a final LLC return to stop the $800.

    • #314755
      Anonymous

      Thank you for your reply! But, to clarify, the brother and sister are both still alive. They inherited the home and then they decided to rent it out two years later. So the decedent’s trust does not come into play. (I thought exactly what you thought at first)

      The brother and sister each have their own living trust.

      So since they did not rent the home in 2020, I was thinking to file a final no activity 1065 and 568. Then report his portion of the sale on his personal return, because the 1099 S was reported in his name and social security number.

      My logic is that there was no partnership income to report, so there will not be anything to report on the 1065 or 568,

      Do you think that I am correct?

      Thank you so mcuh!

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