In a previous post I mentioned the condo that was rented through 2008 in an irrevocable trust. Then when the grantor, who was the tenant died it could no longer be rented due to condo rules. In 2009 through 2012 (it was sold in 2012) it sat vacant. No one ever stayed there. In those years the two sons were paying the condo expenses from their funds. They each deducted the real estate taxes on Schedule A of their 1040 returns. They did not file trust returns as the trust had no income. To me, this property was investment property, so in 2012 they should claim all non sale, condo expenses that they paid as investment expenses subject to 2% on
Form 1041. This will help offset some of the gain from the sale. They are concerned that this is not right, since they deducted the real estate taxes on their own Schedule A's in past years. I don't think that precludes them from claiming Trust expenses on Form 1041 in 2012. Deducting such expenses in 2009-2011 would have accomplished notihng as there was no income and investment expenses can't generate an NOL. I think I remember reading somewhere that a Trust can deduct expenses paid by the benificiary when the Trust has no money. What do you think?
Form 1041. This will help offset some of the gain from the sale. They are concerned that this is not right, since they deducted the real estate taxes on their own Schedule A's in past years. I don't think that precludes them from claiming Trust expenses on Form 1041 in 2012. Deducting such expenses in 2009-2011 would have accomplished notihng as there was no income and investment expenses can't generate an NOL. I think I remember reading somewhere that a Trust can deduct expenses paid by the benificiary when the Trust has no money. What do you think?
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