SBC-SF wrote:

- quote -

Presumably, the trust was worded in a way that it avoided
probate and the beneficiaries received the house with a
stepped up basis upon her passing. Given, that real estate
peaked and likely hasn't risen much in those 18 months,
there may be no gain above the stepped up basis. If there's
a large gain since that time, I'd recommend selling after 24
months, since they lived in the house since then, they can
take advantage of the every two year exclusion on gains.

Disclaimer - I've made a series of assumptions here as there
are missing details. The terms of the trust are key here.
Gains in the last 18 months are also a question.

JOE

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SBC-SF <freewillyb[at]hotmail.com> wrote:

- quote -

Assuming the sister was the sole owner of the house, its
basis is the value it had on her date of death. So there
would be a capital gain only to the extent it has gone up in
value since then.

In general when someone inherits something he becomes the
legal owner on the date of death, even though he really
can't do anything with it until the formalities are out of
the way.

So if local law and the terms of the tust are cooperative,
the kids would be entitled to an exemption of $250,000 if
they live there for another six months before the place is
sold.

Stu

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

My wife is the trustee for the living trust from the death
of her sister. My wife's niece and nephew have lived in her
late sister's home since her death 18 months ago. My wife
wants to liquidate the house and distribute the proceeds of
the sale among her sister's children. Will there be a
taxable event in the form of capital gains as a result of
the sale? If so, are there any strategies to avoid these
taxes before the house is sold?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >