Basis?

[Unregistered]

Taxpayer receives house from mother at mother's death in 2005. Mom had placed home in a trust back in 1990. Can you use a FMV at mom's death or since the home had been
in trust do you use and adjusted basis that mom had? Client stated no estate tax paid at
mom's death.

Thanks, confused in NC

[Bees Knees]

It depends...

If the house was placed in an irrevocable trust, the house does not get stepped-up basis at death.

But if the house was placed in a revocable trust, such as a life estate or remainder interest, then it would receive full step up of basis.

TTB, page 21-28, "Life-estates and remainder interests. If the decedent owned the entire property and gifted the remainder interest, the value of the entire property is included on Form 706 and receives stepped-up basis. Example: Marge deeded her home to her children after her spouse died in 1995. She reserved a life estate in the property which gave her the right to occupy the property until her death. Her children inherit the home without probate. The entire value of the home is included in Marge's Form 706 and receives stepped-up basis."

[Unregistered]

Bees Knees, thank you for your response. In my case it was a revocable trust and the
property is located in Honolulu Ha. and taxpayer really needs the stepped up basis.
Thanks again,EA in NC.