D. Stussy wrote:
- quote -

Even if it says it's irrevocable? I thought you lived in
California. That's certainly not the rule here. An
irrevocable trust can certainly be a grantor trust. But
it's still irrevocable.

Stu

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captainmux[at]yahoo.com wrote:
- quote -

If the trust was a grantor trust (side-dicussion ignored for
the moment), then chances are that there will be a capital
loss to the extent of the costs of sale, because the
stepped-up basis and FMV will be the same.

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Herb Smith wrote:
- quote -

Noted. However, in my state, there isn't a difference. A
grantor trust only become irrevocable upon death of the
grantor, and is always revocable before.

If other states treat this differently, then we need to know
WHERE the property is located.

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Herb Smith" <smithff33[at]aol.com> wrote:

- quote -

True, but wouldn't the house get the step up as it passed
from revocable trust to irrevocable trust? So that the gain
that will be taxable is the gain from the grantor's death
until the property is sold?

-HW "Skip" Weldon
Columbia, SC

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captainmux[at]yahoo.com wrote:
- quote -

No, it does NOT. The irrevocable trust is a separate tax
entity from the decedent. There is NO $250/500 k exclusion
on sale. A trust cannot OCCUPY the house for 2 of the 5
years.

Even if the house was held in a REVOCABLE trust (a
disregarded entity), the exclusion is no longer available
after the death of the grantor.

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D. Stussy wrote:

- quote -

So, does that mean there will be no tax on capital gains on
$250,000 ... as if the decedant had sold the house while
living?

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D. Stussy wrote:
- quote -

An irrevocable trust may not be a grantor trust. It depends
on circumstances which we may not be aware of. A revocable
trust is almost certainly a grantor trust, but....

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D. Stussy wrote:
- quote -

I disagree. The house was transferred to an IRREVOCABLE
trust, a separate tax entity from the decedent. The decedent
died, not the trust.

The cost basis of the house remains the SAME as what it was
when transferred to the trust, and receives no stepped-up
basis. Actually, the executor of the Estate has nothing to
do with the Trust, as there is already a Trustee in place.
Of course, if the original Trustee was the decedent, then a
successor Trustee has to take over. That is not necessarily
the Estate executor.

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captainmux[at]yahoo.com wrote:

- quote -

Yes, there likely will be capital gains tax to pay. The cost
basis of the house in the irrevocable trust is the cost
basis of the grantor (as of 10 years ago). Since the trust
was irrevocable, it does not get a "stepup" of cost basis on
death of the grantor.

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captainmux[at]yahoo.com wrote:

- quote -

Quite likely.

- quote -

That's hard to say without seeing the trust document and
asking some questions. Could be the donor's original cost,
could be the value when contributed to the trust, could be
the value at time of death. You should seek competent local
(in the state where this happened) advice.

MTW

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captainmux[at]yahoo.com wrote:

- quote -

No. The ESTATE will, if any. A grantor trust is a
non-recognized entity. The basis is either last month's
value or its value this coming June if the appropriate
election is made.

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A relative put his house in an irrevocable trust, ten years
ago. He died last month. When the executor sells the
house, will the trust incur a tax libility? If so, what is
the basis?

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