For a Trust that has real estate and some was sold for a loss, is that loss reportable on the K-1 or is the K-1 only reporting incomes, gains, etc -
ie - does the K-1 flow any and all gains/losses to the bene's ?
A. A trust acnnot distribute a loss to the beneficiaries (except in its final year) B. Generally all Capital transactions are kept within the trust, and hence would not show upon a K-1, which is for recording distributions (etc.)to beneficiaries.
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Tnx for the reply - This is one of those complex "family" issues.... The family Trust had a home - wife's mothers - She died, and the house was later sold, at a loss vs death/step value, with the proceeds going into a existing checking account under the Trust name. NO distributions were every made to any of the bene's. One of the siblings says her tax accoutant is demanding to see a K-1 from the Trust.
How and when distributions should/must be made is a different issue/discussion, according to the language of the Trust....
I'm just interested in the K-1 mechanics/logistics and the assoc 1041 forms.
text -
Tell him theee were no K-1s because there was no distributions..
IF your trust specifically allows it and your State allows it, capital gains can be treated as income. Whether a capital loss can reduce ordinary income in a trust is beyond my scope of knowledge. See forms Schedule D (1041) and 4797.
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You must file a 1041 for the estate or trust per 1041 instructions which you should read. Therein you will find that a trust cannot distribute a loss EXCEPT in its final year ( or when the estate is closed if it is an estate, not a trust). If there have been no distriutions, no K-1. You issue K-1s ONLY concurrently with a filed
1041.ed
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