Unique question: I want to start to use K1 for taxes with respect to land trusts but can’t find a good example anywhere. I’ve searched CFD, my Jack Miller Trust course, several workbooks from Dyches, and looked online. I know everyone gets nervous when tax questions come up and “don’t want to be giving tax advise” out of fear of the IRS, but I don’t want to make mistakes on this. I am unable to make it to Dyches class next month on Trusts where I could maybe find answers so that is out. I’ve talked to enough lawyers and tax accountants locally to realize none of them know anything useful about this. Can anyone give me a source for how to use a K1 for tax purposes?
Hi Christiansen, I have been using Land Trust for 35+ years. Usually, the trust is set up as a disregarded entity as far as the IRS and the tax reporting flows through to the benificary of the trust. So the trust is not required to issue K-1’s. If there are multiply Beneficiaries, then each would report on their own tax returns. There have been times that the trustee has received a 1099 for income for the trust. in that instance if there is multiply beneficiaries, I had been advise for the trustee to issue subsequent 1099 to the beneficiaries base on their percentage, which again they would report on there own separate tax returns.
Thank you for this info! So basically it’s just a pass through. I swear I remember some notes in one of Jack’s classes where he used K1s from a land trust to flow into another trust to hide how many houses were actually under his control.
Is there any benefits to having the trust issue K1s? I’m assuming there could be a reason to use the K1 in certain situations.
You are correct. I also remember Jack talking about the same trust into a trust, but remember that was Jack. I think you might be over thinking the whole thing. Now if you want mental gymnastics nothing wrong with that, think on.