You gave the property away when you transferred it to the irrevocable trust for the benefit of your children. You did not sell it, so you do not enter any information on your income tax return with respect to the disposition of the property. The trust, however, is required to file its own for 1041 to report any income, expenses, depreciation, etc. The trust will start with a carryover basis from you, i.e., the basis in the property that you had on the date of tranfer. The form you use to report this transaction is Form 709- US Gift tax return. You should have had the property appraised by an independent qualified appraiser before you made the gift (that is how you figure out its fair market value). You need a tax id number for the trust even if there isn't any income from the property because you still need to depreciate the property. There is no way to avoid a large capital gain or depreciation recapture (ordinary income) to your children via the trust in the future because you have already transferred the property. You need to talk to your attorney ASAP with respect to future contributions to the trust for payment of the annual expenses. One primary reason for using an irrevocable trust is to avoid the inclusion of trust property in your taxable estate at your death. However, there are a slue of things you can do during your lifetime to mess that up and dealing with trust property like it is your own is one of them. At this point, though, the tax reporting obligations stem from the gift transfer and are not income tax related. If these questions are not within your attorney's specialty (which they really shouldn't be if he wrote an irrevocable trust for you), find an estate planning attorney.
This response contemplates only the laws of Ohio and is not intended to apply to other jurisdictions. None of the information in this response should be used or relied upon as legal advice or legal opinion about specific matters, facts, situations or issues. Viewing it does not establish an attorney-client relationship between you and Sherrille D. Akin, the law firm of Isaac, Brant, Ledman & Teetor LLP, or any of its individual attorneys