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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 577
Experience:  10 years experience
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My mother died in May and I am trustee. She had a revocable

Customer Question

My mother died in May and I am trustee. She had a revocable living trust. We have sold her home as required and her bank and retirement accounts are now in my name. I am ready to distribute the proceeds to her heirs. My question is, what are the tax ramifications for these distributions? Do we have to consider the funds as income for 2015?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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No, only actual items of income, such as interest, rents from property,etc.will be income.

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The sale of the home might have created a capital gain, but not likely, because of the step-up in basis that assets received through inheritance receive

Customer: replied 1 year ago.
Thanks. What does "step-up in basis" mean?
Expert:  Lane replied 1 year ago.

When you sell a capital asset, (land, stock, a house) you will either have a gain or a loss or possibly (and your situation is where it happens the most) a break even situation ... Hang with me here and I'll give you an exMple

Expert:  Lane replied 1 year ago.

Capital gain = sales price MINUS basis

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Basis is what you have invested IN the house ... purchase price plus maybe some improvements

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\When assets are inherited. that basis is "stepped-up" to the fair market value of the asset as of the date of death of the decedent

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So when someone passes it's very common for the sales price to be equal to it's basis (unless held long enough for prices to have risen since the date of death)

Customer: replied 1 year ago.
Thanks!
Expert:  Lane replied 1 year ago.

You're very welcome

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If this HAS helped, and you If you don't have additional questions on this, I'd appreciate a positive rating (by clicking the stars on your screen) ... that's the only way I'll be credited with a portion of what you've paid JustAnswer.
...

Lane

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Customer: replied 1 year ago.
No problem. I appreciate your prompt assistance.
Expert:  Lane replied 1 year ago.

I appreciate ... Let me know if I can help again