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Damien Bosco
Damien Bosco, Attorney
Category: Estate Law
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My mother passed in 2004. Her home was in a Trust with my

Customer Question

My mother passed in 2004. Her home was in a Trust with my brother, my sister and myself as beneficiaries and executors. Shortly after she passed the home was taken out of the trust and a interest only loan was received in my sister's name. The home was then placed back in the trust.
In 2015 the home was sold by the Trust, the loan was paid off and the balance of the proceeds were divided equally among the three of us. The home was purchased in 1961 for a mere $35,000 and was sold for $715,000. At the time of my Mother's death the home was probably worth more than $715,000, but property values have decreased in Los Angeles since that time.
I have two questions:
1) Are there capital gains due?
2) Out of the money I received, I have loaned my two adult children thousands of dollars. Since I have not been paid back am I allowed to write the loans off as losses?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Damien Bosco replied 1 year ago.

You would have to pay capital gains but the basis depends on whether the trust was revocable or irrevocable. If revocable the capital gain would only be paid on the different in value from the date of death to the sale. If irrevocable, it would be from the transfer of the property into the trust back in 1961. With regard to the loans, you would be able to deduct the debt.

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