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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I have a question about capital gains on securities sold

Customer Question

I have a question about capital gains on securities sold within an irrevocable trust
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.

What's your question?

Customer: replied 1 year ago.

There is a family account with an irrevocable trust. Approx half of it is held in stocks. There is concern that the risk level is too high with the owner's age. If he converts the stocks there is a gain of approx 100k. The account manager says it will reduce the principal due to capital gains. My question is, does the capital gain get paid when the sale is transacted or when the money is actually taken out of the account? Also, is there a tax benefit in delaying the sale of the stock?

Expert:  Stephen G. replied 1 year ago.

The capital gain would be taxable in the tax year that the sales occur.

Other than deferring the capital gains tax by not selling the securities, if it is actually an Irrevocable Trust (in that the grantor has no control over the Trust), then there is no other benefit to delaying the sale. The investment risk always should trump the tax issues.

Customer: replied 1 year ago.

ok thank you.

Expert:  Stephen G. replied 1 year ago.

Remember, that it's the trust that pays the capital gains tax unless there is a distribution permitted by the terms of the trust.

Expert:  Stephen G. replied 1 year ago.

Please remember to rate my response as that is the only way we receive credit for our work.

Thanks for using

Expert:  Stephen G. replied 1 year ago.

Just checking in..............Do you have any follow-up questions that I may respond to? If not, I would appreciate it if you would take a moment to rate my response in order that I may receive credit for my work. Thanks very much.

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