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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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i just sold a property owned by my trust. Is this money taxable

Customer Question

i just sold a property owned by my trust. Is this money taxable? My father put his business in a trust before he passed away last year.
Submitted: 5 years ago.
Category: Tax
Expert:  RD replied 5 years ago.

Is the property sold by the trust or by the estate?

Customer: replied 5 years ago.

it was sold by me and my brother to another brother also on the trust. So I think it was sold by the trust.

 

We have a separate account and lawyer for his personal estate.

Expert:  RD replied 5 years ago.

Yes the gain on sale of the property will be subject to tax at the trust level or if the terms of the trust allows the distribution of capital gain than this could be passed through to the beneficiaries via a K-1 and will be taxed to the beneficiaries.

 

If the property was inherited from a decedent than the cost basis for the purpose of gain calculation will be the fair market value of the property as of the date of death of the decedent.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Customer: replied 5 years ago.

can you give me some kind of estimate how muchthe tax would be on a total of $105,000?

and also, how would i report this, would it be under capital gains? should I do a 1040A this year?

Expert:  RD replied 5 years ago.

What type of trust is this? Is it your own revocable trust? or it is the trust set up by your Dad with you and your brothers as the beneficiaries? Was this trust set up as an irrevocable trust by your Dad before his death?

Does the trust document allow distribution of capital gain? if not, this may be taxed to the trust and you may have to fiel Form 1041 for the trust to report the gain and pay taxes on it.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
RD and 6 other Tax Specialists are ready to help you
Customer: replied 5 years ago.

to be honest, I don't know the answer to your last question. Me and my two brothers were on it, it was supposed to go to us after my dad's death. We all owned 1/3 share equally. The one brother bought us out.

 

I'm just trying to figure out how much money i need to set aside before I spend it all. (buying a house)

 

Nobody can give me any kind of staight anser, should i just take the copy of the trust to and accountant? Would he be able to give me and estimate?

Customer: replied 5 years ago.
i'm going to get offline now and go to bed. Thank you for your help.

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