1041-US: Special allowance for rental real estate activities with active participation (FAQ)

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IRS filing deadline update

The IRS MeF system is now processing returns, and the filing deadline has been extended to 11:59 PM on Wednesday, April 18, 2018. For the latest details, see UltraTax CS alerts and notices.

Question

Is the special allowance for rental real estate activities with active participation allowed for fiduciary returns?

Answer

The special allowance is not applicable to trust returns. A critical diagnostic message displays if the designation is for an activity.

The special allowance is applicable to decedent's estate returns for the first two years of the estate's existence, just like an individual return. On Screen Rent-2, K1-3, or K1T-2, enter 2 in the Passive activity code field to indicate the activity is rental real estate with active participation. Also, on Screen OthInfo enter the amount of the $25,000 allowance, if any, that the surviving spouse will use in the current year.

Related topic: 1041-US: Passive loss information FAQs

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