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jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3161
Experience:  I've prepared all types of taxes since 1987.
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I asked a question regarding my father selling his house to

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I asked a question regarding my father selling his house to my sister a few minutes ago and I forgot to mention that the interest in the home was conveyed to the family trust 2 years ago and is in a family revocable living trust formed in Colorado to which myself and another sister are co-trustees and have full real estate powers. Are the tax implications for the trust the same as an individual regarding lifetime gift tax credit or annual gift allowance. My fathers' wish is for the trust to sell the house to my sister. Fair market value approx. $200k. Proposed sales price is the same as the note $145K.




All revocable trusts are grantor trusts for which the income and deductions are reported by the grantor and the trust does not file tax returns and is essentially disregarded for tax purposes. That is, the activity of the revocable trust is treated as if it was the activity of the grantor.


Internal Revenue Code sections 673-677 and 679, and the related regulations, determine whether a trust is a grantor trust. For a more detailed definition see,,id=106551,00.html


If the trust is a grantor trust (as evidenced by not filing any tax return) then there is no tax difference for the grantor between the trust making a gift or your father, presumably the grantor, making a gift.


Of course, this is general information and for legal advice or opinion for your particular facts and situation (such as to confirm it is a revocable trust) you would need to consult with an attorney that can review the trust agreement and applicable local law.

There could be potential issues for adhering to the trust agreement (for example, if distribution amounts or percentage are specified in the agreement) when the trust will gift to one or some but not all of the beneficiaries depending on the language of the trust agreement.


Please ask if you need clarification.

Best regards.


jgordosea and 3 other Tax Specialists are ready to help you
Customer: replied 8 years ago.
Thank you for your response. The response provided was referenced with IRS code and I will look into this further. From your answer it sounds like that we will need to contact the Law firm that drew up the trust, J.R. Phillips and Associates in the Denver area regarding the trust agreements distribution amounts.

Thanks again your answer, it was very helpful.