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Three brothers inherited a house. Turned it into a rental. How is the income reported to each for tax purposes?

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Level 1

Brothers intend to rent property for less than two years total before selling.

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Level 15

This sounds like a partnership, which should get an ID number to file for 1065. I believe this is especially true since one partner is a trust. 

https://www.irs.gov/businesses/small-businesses-self-employed/partnerships 

https://www.calt.iastate.edu/blogpost/when-small-partnerships-dont-file-partnership-return is of interest


ex-AllStar

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Level 15
Does an estate or trust own this, or is it now owned by the individuals?

ex-AllStar
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Level 1
It is owned by the individuals. One of the brothers is mentally challenged so his share is owned by his trust.
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Level 1
Can we just use the P&L for the property and let each take 1/3 of the net profit or do we need to issued K-1's?
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Level 15

This sounds like a partnership, which should get an ID number to file for 1065. I believe this is especially true since one partner is a trust. 

https://www.irs.gov/businesses/small-businesses-self-employed/partnerships 

https://www.calt.iastate.edu/blogpost/when-small-partnerships-dont-file-partnership-return is of interest


ex-AllStar

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Level 12
Joint ownership of rental property does not necessarly need to be on a 1065.  They can each report their share on their personal tax returns.

"A joint undertaking merely to share expenses is not a partnership. Mere co-ownership of property that is maintained and leased or rented is not a partnership. However, if the co-owners provide services to the tenants, a partnership exists."
https://www.irs.gov/instructions/i1065#idm140242305001840
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Level 15

Divide by three?

Former Chump... umm.... AllStar.
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Level 1
Do we simply use the P&L statement or should K-1's be issued for each?
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Level 3
Divide by three.  No K-1 required as long as no partnership or LLC was established.
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