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My wife inherited an investment through a living trust that…

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My wife inherited an...

My wife inherited an investment through a living trust that was liquidated due to a sale of the investment property by an investment brokerage. It's my understanding that since this was inherited through a trust she would not be taxed. If true, how do we record on our return this year as the brokerage firm stated they would be sending the IRS a 1099-DIV form.

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

Not to my knowledge. We do not even have documentation that would show how much the investment would have been valued at on the date of the surviving spouse's death.

Submitted: 8 months ago.Category: Tax
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12/12/2017
Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 8 months ago
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,765
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Welcome to JustAnswer!

My name is ***** ***** I will be able to assist you today.

Generally, the assets in a revocable trust will step up in cost basis at the time of death of the grantor of the trust. Therefore, assets that are sold soon after the grantor passes away are generally not taxable to the beneficiaries of the revocable trust.

The trustee should document the date of death value of the assets held. You are always able to look up stock prices on the exchange the stock trades on. If you have real property, you should have an independent third party appraise the property for a valuation.

___

I use the word generally because assets inside a trust may be tax deferred such as an IRA or an annuity. Additionally, an asset may increase in value after the passing of the grantor or the trust may receive additional income.

___

The trust will issue a 1099 or a K-1 to the beneficiaries to disclose, any taxable income that is distributed from the trust to the beneficiaries. You will complete your tax return with the information the trustee provides you.

____

Enter the ordinary dividends from box 1a on Form 1099-DIV, Dividends and Distributions on line 9a of Form 1040, U.S. Individual Income Tax Return. Enter any qualified dividends from box 1b on Form 1099-DIV on line 9b of Form 1040.

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Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 8 months ago

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