If previous to 2010 taxpayer set up an irrevocable trust and contributed rental farm land to this trust and retained a life estate, does this land receive a step up in basis at the taxpayer's death, if the death occurred prior to 2010?
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See IRC Sect 2036(a)(1) & (2): "The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer.....by trust or otherwise, under which he has retained for his life....... the possession or enjoyment of, or the right to the income from, the property......"
This means it is includible in the decedents estate for Estate Tax purposes, and therefore gets a stepped-up basis at death (under the law in effect prior to 2010.)
Comment