Hi and welcome to Just Answer!If that is a grantor's trust which is a revocable until the settler dies - yes the full property gets stepped up basis.The same is true for AB trust - instead of leaving their property to each other, the property is transferred into the which becomes irrevocable after the first spouse died.In both situations before 2010 the property gets full stepped up basis in community property states.Amended tax returns are mailed to the IRS and processed manually - generally the fact of amending the tax return is not a red flag. However if changes resulted large tax refund - this return may be a subject of so-called "desk audit" - it will be reviewed by the IRS agent who would decide it the return should be audited. Most "desk audits" do not trigger actual audits.
The trust is a living trust, which is revocable. I'm not sure if it is a grantor or AB trust. Does it being a revocable trust make it qualify for the full stepped up basis?
Yes - property held in a revocable trust is treated as owned by the settler for income tax purposes - and the property gets stepped up basis.
Thank you. That answers my question.
You are welcome.