Revocable Trust on 1041

[DaveO]

I have some new clients under extension for 2015. Reviewing their 2014 returns they had their 1040 and a 1041 for a family trust containing two rental properties. Working with their source documents for 2015 all the 1099 forms reporting rent have the taxpayers SSN instead of the trust ID number. The rents are reported to “John Doe Rev Trust”, not “Doe family trust” as the 1041 is titled. The properties are titled John Doe Rev Trust. The previous accountant has filed the trust return since 2009. It doesn’t seem to be necessary as the taxpayer is the sole beneficiary of the trust. I don’t want to get a notice by not filing but don’t want to file an unnecessary return either. Any thoughts?

[TaxGuyBill]

I assume this is a revocable Grantor Trust?

I don't do 1041s, but I want to point this out in the instructions if you decide to change it:

Changing filing methods. A trustee who previously had filed Form 1041 can change to one of the optional methods by filing a final Form 1041 for the tax year that immediately precedes the first tax year for which the trustee elects to report under one of the optional methods. On the front of the final Form 1041, the trustee must write “Pursuant to section 1.671-4(g), this is the final Form 1041 for this grantor trust,” and check the Final return box in item F.

For more details on changing reporting methods, including changes from one optional method to another, see Regulations section 1.671-4(g).

https://www.irs.gov/instructions/i1041/ch01.html#d0e1849

[Kram BergGold]

Get the Trust Documents

You need to read the trust documents so you can determine correct from incorrect.

[DaveO]

I'm waiting on the trust documents. Hopefully there will be some direction on dissolution. At a minimum it was sloppy execution of the trust having property titled wrong.

[Burke]

Was it not the owner's intention to have it titled in the trust? Nothing wrong with that, and as you note, no 1041 was necessary if it is an RLT and the grantor(s) are still living. And it does not have to be dissolved. (Most of these rental properties I see nowadays are in LLC's.) The info in TaxGuyBill's post would be the way to go here.