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If the trust generated any earnings (dividends, interest, etc.) for the year which are being passed through to your son then that income would be taxable to your son. If assets are being distributed in-kind from the trust to your son then his cost basis to determine gain or loss when he sells the assets would be the cost basis within the trust. If the trust was funded with assets that were transferred in-kind from the estate then the cost basis for the assets would generally be the fair market value on your parent's date of death.