Question

We have a rental property owned by an LLC with a trust as the sole member. How do we report income/expenses in this scenario?

Forum|Forum|6 years ago
June 1, 2019
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This depends on what kind of trust is the owner of the LLC.

A single member LLC is (unless it has elected to be treated as a corporation or an S-corporation) always a disregarded entity. This means the income and expenses are included with the owner’s return as if the LLC did not exist.

If the trust is a living (or a grantor) trust, the entity is disregarded for income tax purposes from the individual owner. In this scenario, the income and expenses will be reported on Schedule E of the Form 1040 of the grantor (as if the grantor owned the rental in their own name).

If the trust is a domestic trust (a non-grantor trust) or income of the estate of a deceased individual, the rental income will be reported on schedule E (Form 1040) attached to a Form 1041 US Tax Return for Estates and Trusts.

R

relyonendyind416

Thanks for the answer. While I am working on the 1041, there is no place I can enter information for Schedule E (for a LLC solely owned by the irrevocable non-grantor trust). May anyone share how? Thanks

DaveF1006

Thank you for the reply. I understand how to enter the information relating to 1) Rental/Royalty Properties or 2) Business Investment on Schedule K-1, but how to enter the information for a soly owned LLC by the trust. The business does not relate to rentals and no K1 since it is soly owned by the trust. Thank you

To clarify, what business is the LLC involved with if not rentals? Is the LLC have multi partners of just one? Why do you need to report Schedule E for the LLC?

@relyonendyind416

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