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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29799
Experience:  Taxes, Immigration, Labor Relations
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I have a trust that is 22 yrs. old. I havae paid taxes every

Customer Question

i have a trust that is 22 yrs. old. I havae paid taxes every year on the dividends. Now the company says I cannot take the dividends and subtract them from the final sale of the trust which I took in 2015. Is this true or has he really no knowledge of tax info>
Thank You *****
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Hi Alice,

There are many issues we need to clarify before answering your direct question.

- is that revocable or irrevocable trust?

- you wrote - i have a trust - does that mean - you are a settler? you created that trust?

- or the trust was created by another person and you are a beneficiary?

- you wrote - the final sale of the trust - do you mean the sale of assets held in teh trust?

- if so - what are those assets and what are gains realized on that sale?

- also - if the trust is dissolves or it still exists?

Any other additional information might be helpful to understand your situation...

Customer: replied 1 year ago.
We have a trust what is about 20 years old. We have paid taxes on the dividends every year . Now since we sold our revocable trust in the Templeton income fund, I am being told by the company that I cannot show the dividends and lower my cost of the sale of same. Is that correct, or is the company lacking knowledge of the codes in the IRS?
Expert:  Lev replied 1 year ago.

So far - that is a revocable trust based on your response.

That means - the trust is ignored - and assets in the trust are treated as owned by the settler - who presumably is yourself.

That is why all dividends were reported on your own tax return asnd included into YOUR income.

Correspondingly IF dividends were reinvested - these amounts are added to the basis on shares you own.


Now regarding the sale transaction.

You may not sell the revocable trust - but you may sell assets held in the name of the trust.

When that occurs - you would reported the sale transaction on YOUR tax return because that is a revocable trust.


My understanding is that proceeds were used to purchase shares of the Templeton income fund - is that correct?
So we need to verify if that fund pays any dividends and how these dividends are used - reinvested or distributed?

Let me know if you are willing to discuss your issue over the phone.

Customer: replied 1 year ago.
I don't know if my reply was sent so I retype my answer. For all those many years I received dividends and they were reinvested into templeton income fund. The company says I cannot take the loss and they are showing that the company list them as short term gain or loss which is not true. I sold our shares because the did not like the company that templeton turned my shares over to american stock transfer & trust co, LLC. Now does that make a difference? Thanks Alice Szuran
Expert:  Lev replied 1 year ago.

dividends which were reinvested are ADDED to the basis.
However we still need to keep track separately for long term and short term gains.

There is no choice.

The administrator sends you form 1099S which reports gross sale proceeds and in some situations might report the basis.
For older investments - the basis is not reported - and that would be your responsibility to calculate your adjusted basis.

If you administrator reported incorrect basis - that must be corrected.