Filing tax for rentals transferred from trust

[George Habator]

Hi, all. Here's a question for the tax pros.

My grandparents left rental property in a trust, of which i had a share. (The property is in CA, if it matters.) In March of '21, the trustee transferred title of the property to all beneficiaries personally as tenants-in-common. The rental tenants continued to pay rent to the trust and the trust account paid all expenses. This went on the entire '21 (without my knowledge). Now, the trustee's CPA said that the trust should file taxes for all fiscal activity for the whole year and he'll give a K-1 to everyone for their share. Then, nothing else should be filed individually on anyone's return for this property.

Is this correct? It seems to me that the trust can only file activity until the title transfer and i must declare everything from title transfer and beyond on my own Schedule E. Please clarify. Thanks

[David M.]

@George Habator

ATM = at the moment

I think the issue he is saying is because you are owning the property as Tenants in Common, basically all of you are on the Deed, and the Trust is still the landlord, because they gave the lease, its pretty messy.  The trust needs to continue to file an estate/trust tax return to spit out the K-1's to you, and then everybody needs to the include the K-1 info AND split up all the expenses (I'm assuming the trust isn't picking up the tab anymore) to go onto all of your personal returns, e.g. the SchE.

That's my take on his short post...