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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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Experience:  10 years experience
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I am trying to file a trust tax return. The trust has

Customer Question

I am trying to file a trust tax return. The trust has substantial seller finance interest income and one rent property with a loss for this year. I am having trouble getting the computer program to add the rent loss to either the K-1 or to the form 1041. I am using Sch E for the rent property. Is there another form I should be using with a 1041? Or is the loss just not deductible?
Submitted: 7 months ago.
Category: Tax
Customer: replied 7 months ago.
This is a simple trust, all income distributed annually.
Expert:  Jonathan Tierney replied 7 months ago.

Hi, my name is ***** ***** I can help. Rental real estate is a passive activity and losses from the activity are often suspended until their is income or until the activity is disposed of. Is your program generating Form 8582, Passive Activity Loss Limitation? In addition, while the trust could deduct a rental real estate loss if the passive activity rules allowed it, a trust is not allowed to distribute rental losses, only income. A trust is different from a partnership or S corporation in that regard as it is unable to pass through all items of income, deductions, and credits to the beneficiary.

Customer: replied 6 months ago.
Is the Sch E the proper form for use with a trust?
In all prior years this rent property has had gains, so there are no suspended losses. This is the only rental property for this year. What else would you need to know? The amount of loss is approximately $12,000
Customer: replied 6 months ago.
8582 has been generated. Could I email you a copy of the return?
Expert:  Jonathan Tierney replied 6 months ago.

Schedule E is the proper place to report rental real estate income and losses. I can only give out my personal information if you accept an additional service offer, which I will post now.

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