Where To Report Trust Real Estate Income?

I am a beneficiary and trustee of a pass-through irrevocable trust, the sole income of which is rent from a land lease.
Through the years, I have reported the income in Part I
(Rental Real Estate) of Schedule E with no problem; but wonder if it would be more appropriate to report it in Part III (Income From..Trusts)
Or does it not really matter so long as the income finds its way to line 17 of Form 1040?
What say you?
Thanks
Bill
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William Brenner wrote:

You need to fill out a 1041 for the Trust itself, and there's a schedule E that belongs to the trust. The trust issues you a K-1 which is filled out appropriately to flow to your own tax return, your own sch E is part of your return. It's a good idea to get it right, both to be certain you are paying the right tax, but also to avoid an audit. I suppose the best outcome of an audit is when you are told "wrong boxes, but your total tax computation is correct" but why not get it right 100% the first time? And here, it seems you had it right anyway. JOE
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If the trust took any deductions you would report it on Part III because the trust used Part 1 and put the net on your K-1, orgave you the gross and deductions to oput on Part III. If the trust passed the income straight through to you and there are deductions, you must use Part 1 to get them. That is: Someone must use Part I to get deductions. If there are no deductions, jsut ordinary lease income with no depreciation, taxes, travel, etc, it doesn't make any difference where you report it. Part 1 of Schedule E is the only way to take RE deductions. ed
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Fill out the 1041. You'll find that the exemption amount will reduce the amount of rental income you have to report through your K-1. I have had several situations like this where the IRS has forced a client to file a 1041 for a single distribution after the death of the owner. I hope they are regretting it because in each situation the survivor has ended up reporting less income on their own 1040, and paying less tax. Linda Dorfmont E.A, CFP, CSA
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