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My brother and I sold my dads house that is in a revocable…

My brother and I...

My brother and I sold my dads house that is in a revocable living trust. My mom is deceased and my dad is in Memory care facility with my brother and I as POA. The proceeds of the sale were tax free for trust. Does that mean that any distributions my brother and I take are also tax free.

Lawyer's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

This is in the state of florida

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3/25/2018
Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 42,567
Experience: 17 yrs estate law, real estate. Wills/Trusts/Probate
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Hello and welcome! My name is ***** ***** I am a licensed attorney and will try my best to help with your situation. There may be a slight delay in my responses as I type out an answer or reply.

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Does that mean that any distributions my brother and I take are also tax free.

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If you are beneficiaries of the trust, then yes, you aren't taxed on distributions from the trust, only on actual income that the trust assets might earn that is then passed through to the beneficiaries.

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thanks

Barrister

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Customer reply replied 3 months ago
Thanks . So even with my dad still alive and my brother and I as POA. All proceeds would be tax free for us. Is there any firm we would need to fill out for uncle sam
Customer reply replied 3 months ago
When will u call

So even with my dad still alive and my brother and I as POA. All proceeds would be tax free for us. Is there any firm we would need to fill out for uncle sam

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Correct, any disbursement from the trust would just be considered a gift from father (maker of the trust) to you as a beneficiary. And no, this is not a taxable event for you.

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The phone call offers are auto generated by the website, not me personally. I do not participate in the phone call program for the site and limit my interaction with customers only to the website because I like to have time to think about a customer’s question and research it so I can provide the best answer possible in writing.

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However, if you have requested a phone call with an attorney, your request will post to other experts that do offer this service. When another attorney accepts your request you will get additional instructions.

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I am more than happy to continue on the website though..

Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 42,567
Experience: 17 yrs estate law, real estate. Wills/Trusts/Probate
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Joycelaw
Joycelaw, Attorney
Category: Estate Law
Satisfied Customers: 120
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Customer reply replied 3 months ago
Would there be a limit on gift before being hit with capital gains taxes

You are mixing conflicting terms there.... A gift potentially can incur gift taxes. Capital gains taxes are only incurred when an assets is sold for more than it was purchased for.

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So a gift will never incur capital gains taxes. It could potentially if the gift was later sold for more than the cost basis..

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example.... dad gifts you a house that he paid $50K for and is now worth $100K.... there is no taxable event for you as the recipient of the gift... Dad could potentially have to pay gift taxes on the $35K over the annual gift tax exclusion, currently $15K. He can avoid any tax by filing an IRS Form 709 with his taxes to use up a tiny portion of his $5.6 million lifetime gift tax exemption.

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But if you later sell the house for $150K, you have a $100K gain that incurs capital gains taxes because you took the property at the same cost basis as dad at $50K.

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Customer reply replied 3 months ago
if we file IRS form 709. There would be no taxes paid on the 340000 gift.

For father, correct. He would file it with his taxes in the year of the gift... and $35K....not $34... the annual gift tax exemption is $15K for 2018...

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Customer reply replied 3 months ago
Not 34 or 35 thousand. But 340 thousand as a gift.

This is the first I am hearing of a $340,000 gift... I was using my example of a $100K house.. But no, if he gave a gift that large while living, then as long as he filed the 709, no gift tax.

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