Have a Tax Question? Ask a Tax Expert
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Sorry to hear that you had to go through losing your grandmother; it is never easy.
What was her date of death and what was the date the house was sold?
Was it her primary, personal residence?
Let me go get that information. I'll be right back. It was her personal residence.
Was she single when she died?
Who is the beneficiary of the trust & how many beneficiaries are there?
Yes, she was single. The house was sold on 6/29/2011. Her date of death was 6/26/2011.
Wow. Were there significant additional assets in her trust?
I'm sorry - date of death was 5/26/2011. Her house was the only asset. Also, I just had a repair person come to my house (what timing). Can we get back together in about an hour?
Sure, you probably don't owe any tax
Thank you. How do I get back to you?
We will leave this "chat" open & just type that you are ready when you return
I'll look for you around 3:30 your time just in case
Hello, Mr. Grizey. I'm back.
Are you there?
We seem to have lost part of our conversation;
However it really doesn't matter; we are better off in Chat than switching to Q/A format
are you getting this??
Yes. I'm back but not 100% tied to the chat yet, but let's continue if possible. This shouldn't take too much longer. Thx
OK, now I presume the trust was a living revocable trust while she was alive, meaning she could control the house, live it it, etc.
what does not 100% not tied to chat yet?
Yes, that's correct.
I'm still dealing with a home repair person.
Ok, well since the property was sold so soon after death, the selling price can be used as the fair market value of the house at the date your grandmother died; which means no capital gain and you may even have a deductible capital loss created by a real estate commission, closing expenses, etc.
Who is/are the beneficiaries of the trust?
Me and uncle.
Ok well the sale is just reported on the 1041 of the trust's schedule D;
Okay - I should be back 100% now. I was hoping the FMV could be set at the selling pricing. Therefore, do I still need to complete and file a 1041 to report the proceeds of the sale, but just show the cost as the FMV? That's what really confused me because the return looks like a $0 return.
When someone dies like this, the gain or loss is considered long-term, no matter what the actual holding period and the property is consider as "property held for investment"/.
Well, did you pay a real estate commission?
Yes - $25,000.
Then you actually have a deductible loss on the sale, which is passed on to the beneficiaries via the "other information" on their K-1s in the final year of the trust;
Okay, very good. So I still complete a 1041, but with a loss that's passed on to me and my uncle. I was getting confused because of the reading I did regarding an election not to use step us basis as the FMV. But in this situation, I can use the FMV as the step up basis, correct?
Yes, but that's why I asked you what else she left;
There were only very old household items (furniture, etc.). No stocks, jewelry, cars or other properties.
Right, so there's no issue.
Okay. Thank you very much. I think I was just reading too much and giving it way too much thought.
You can forget all that stuff, naturally; it is too small to worry about; no tax ; no problem;
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Thank you very much!
ok, you are welcome