Discussion:Depreciation of asset previously in trust
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Discussion Forum Index --> Advanced Tax Questions --> Depreciation of asset previously in trust
Discussion Forum Index --> Tax Questions --> Depreciation of asset previously in trust
| 20 August 2009 | |
| If an asset is in a revocable trust and depreciated (rental property), how does the beneficiary depreciate it when it is received by them and placed into service. Do I use the adjusted basis? Remaining life or start over on the life? I can't find this in any publication of the 4562 instructions.
Please help! | |
| 20 August 2009 | |
| unless the estate or trust deams the distribution a sale, then a carryover basis (with same holding period and accum deprec) is used by the beneficiary. | |
| 20 August 2009 | |
| This isn't meant to offend, but there are some good texts and CPE classes out there in 1041 preparation. I wouldn't do a 1041 without taking a class or two, personally. Just like I didn't do anyone's 1040 other than my own before I took some classes. This stuff is why people need professionals. They can get it wrong on their own. It would be better for them if we didn't get it wrong too. | |
| 20 August 2009 | |
| Don't worry, no offense taken. I wasn't hired to prepare a 1041, but I need numbers so I can depreciate, I need an NOL and final numbers for the trust, so I can prepare my clients 1040. My client paid over $1,200 (I'm in Idaho so this may sound low) for each of the last two trust returns that were filed under an estate EIN and where assets were distibuted in full in JUly of 2007 yet the 2007 is not marked final and does not show the distributions. I know there may have been miscommunication, I don't want to make the situation worse by making any more mistakes. It looks like I am going to have to refer her elsewhere. Thanks Kevin. | |
| 20 August 2009 | |
| could you call the accountant who prepared the 1041 to ask some questions? | |
| 20 August 2009 | |
| I previously did but no return call. Just called again and left another message, I'm hoping he will be willing to help and perhaps amend the returns he completed as some of the items appear to be a bit negligent. I haven't even gotten into a few more issues, just a can of worms, that I wish I never ever got into. Nice client, but an emotional one that has cried to me more than once. I did talk to the original accountant and he is blaiming the second accountant saying that he was suppose to amend the returns he prepared. A little bit of blame game. First accountant was investment advisor doing a little taxes on the side. I do appreciate all your help today. | |
| 21 August 2009 | |
You are kind of out of luck here (unless you want to redo all the returns), but the basic concepts you need to understand are:
The revocable trust files for an ID# and becomes an entity for tax purpose as at date of death. The property is considered placed in service at value for estate tax purpose and depreciation begins on that date. When the property is transferred to the beneficiary, basis and accumulated depreciation will transfer directly -- however...♫ Property that was active rental in the hands of the decedent will continue to be active rental in the hands of an estate (for two years), but trusts are not allowed passive losses, so in the likely absence of an election to treat the trust as an estate (or part of one) for tax purpose, an accumulated rental loss on distribution becomes an addition to basis (which just sits on the books, not eligible for depreciation, until sale). | |
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