This is going to be a tax question I will ask my tax guy next year. I live in CA and own part of a Farm in ND where we rent out some land for the past few years. My part of the farm is titled in a personal asset trust with a different tax id then when I do my regular taxes. I basically never told my tax man that the farm had a separate tax id, it never really dawned on me to mention it so we always filed my state and federal plus ND tax under my social security number. I’m just curious will I have to file two complete separate state and federal taxes because of this or just file the ND state taxes under the correct EIN ? I hope I somewhat explained this correct.
I’m not a tax expert, but I’ve been involved in similar situations:
It sounds like the farm is a shared asset. If that’s the case, as a separate tax-paying entity with a separate tax ID, it would owe FIT on monies earned and would probably have to file a tax return and report disbursements to all owners. Since it has a tax ID, it should also have a designated manager responsible for the farm’s tax obligations.
In most cases I would think that a combination of a trust with an LLC within it would be the cleaner way to handle the situation you describe. Then the LLC and/or the trust would report to the IRS the disbursements and tax ID’s to the IRS and send the necessary reporting documents to the the LLC owners.
To be on the safe side you might want to consult your tax guy before you file FIT for 2024.
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Trust returns are exceedingly complicated and can vary a lot depending on state-by-state rules. The Trust should file it’s own US and ND return. How that impacts your personal taxes depends on how the Trust “distributes” income. Definitely talk to your tax guy about this. PS…I’m a CPA and work with Trusts quite a bit.