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Thank You. Hopefully I will make sense. My mother passed in…

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Thank You. Hopefully I...

Thank You. Hopefully I will make sense. My mother passed in 2013 and here estate was put in a supplemental trust for my father. He passed in 2015 and I am the trustee. I have 5 siblings and now we are the heirs. We are selling the house and the deed is still in the trust name.

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

I ama not sure if the check will written to me. If it is and I disperse the money will I be accountable for the all the income tax on it. I am really confused on what to do. The house is in Mass. and I am in PA. My siblins are in 2 other states. Am I making any kind of sense

Submitted: 5 months ago.Category: Tax
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12/22/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 5 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,220
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My Lane’s Lane …

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice to clients on three continents since 1986.

If you’ll please bear with me for a minute I’ll type up my initial response, and then we can go from there if you have further questions on this.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 5 months ago

What you should make an effort to do is get everything processed in one tax year. Selling the house in the trust's name means that the trust has income ... which means that the trust has to file a form 1041 (income tax return of a trust)

...

However, you can, use the K-1's from the trusts 1041 to distributed the gain out to the beneficiaries OF the trust (so as to be taxed on the gain at the MUCH lower individual rates)

...

There's also the possibility that becasue the basis of the house was stepped up the the fair market value of the house on the date of your fathers death ... that there may not even BE a gain (selling costs can be added to basis as well)

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 5 months ago

The check will be written to the trust, if the trust is what's on the deed to the property.

...

You'll then distribute according to the terms of the trust

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And again, whether or not a gain exists (or the trust has any OTHER income) you may not NEED to do the 1041

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Capital Gain = Sale price - Basis

...

And again basis is the fair market value of the hopuse as of the date of your dad's death + any improvements you've made since then + selling costs ... so you MAY actually have a small loss ... and it will just be a matter of writing a checks to the siblings (or distributing cash for that matter)

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 5 months ago

DID you see my answers? We can talk this through on the phone if you like. You'll need to accept the call offer you likely see (if not you will soon ... the site does that)

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Customer reply replied 5 months ago
Thank you this makes a lot of sense. I do not have any documention of the value of the home at the time of the death of my father. Is there away to find that?
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 5 months ago

Sorry ... was on the phone.

...

You can use like kind sales at the time, talk to realtors, etc. ALl IRS requires is that it be reasonable.

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Just take sales that happened in the area at around the same time, residential property, divide by square feet and then apply to the square footage of the house. If home prices haven't risen a LOT in 2 years, you're likely at a loss anyway.

...

That would mean no income for trust, no reason to file, and just distribute the proceeds to the heirs.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 5 months ago

Please let me know if you have ANY questions at all, before rating me.

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating, using the stars on your screen, and then clicking “submit" (you may have to scroll up to see the stars, OR look to one side or the other if you’re on a device, such as a phone or tablet) – That’s the only way I’ll be credited for the work

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Lane, JD, CFP, MBA, CRPS
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