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Anne
Anne, Master Tax Preparer
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We have a charitable remainder trust. We allowed to transfer

Resolved Question:

We have a charitable remainder trust. We allowed to transfer to ourselves 10% of the trust value each year. We transfered our 10% this year by transfering the stocks from our trust account to our joint account. We choose to use the step up method where we did not look at capital gain but the actual value of the stock which equaled 10% less one dollar. How is this reported on the 4997 irs form?
Submitted: 1 year ago.
Category: Tax
Expert:  Anne replied 1 year ago.
Hi

Thank you for using justanswer. Since you chose to take the stock instead of the cash, there will be no tax due until you sell the stock.

When you do sell the stock, you will report the sale price, and the "stepped up basis", which means the stock transfers to you at the value its worth on the day you receive it as opposed to when it was originally purchased on the Form 4797.

Unlike the trust, you will be taxed on the capital gain at the time of sale. Capital gain is calculated as follows:

Sale price less basis (which for you is the value of the stock on the day you receive the stock)

Currently capital gains are capped at 15% of the gain.

I truly hope this information is helpful but please do not rate until you are satisfied. If you want to click on 1 or 2 just click on the continue to work with me button instead. You will then be able to add any other info or respond to what I have posted so far. Rating 3-5 gives me credit and a good rating but you can still converse with me.

Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1766
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Anne and 8 other Tax Specialists are ready to help you
Customer: replied 1 year ago.

when i took the 10% from my charitable trust the 10% was the actual amount i would took it in cash. instead i took it in stocks and so do i pay the capital game of those stock when i sell them? im allowed to take 10% i took the amount of 10%.

Expert:  Anne replied 1 year ago.
I understand what you're saying, however, if the stock had been sold while it was still in the trust and then you were given the proceeds, the trust does not pay capital gains on the sale. That's part of the benefits of having the money in the trust.

However, you, as an individual, do not have that benefit. Since you took the stock, and you can technically sell them at any time in the future, then you, as an individual, must pay capital gains tax.

Since you just recently took the stock, if you sell it soon, you should just about break even. You might actually have a loss since you're allowed to include your broker's fee as part of your cost basis, and then the loss would net against the rest of your income, allowing you a tax break .

Again, I truly hope this information is helpful but please do not rate until you are satisfied. If you want to click on 1 or 2 just click on the continue to work with me button instead. You will then be able to add any other info or respond to what I have posted so far. Rating 3-5 gives me credit and a good rating but you can still converse with me.
Expert:  Anne replied 1 year ago.
Thank you very much for the accept and the excellent rating!

Please feel free to ask for me by name if I can help you in the future.

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