Estate VS Trust

[tpnl]

What does everybody think about people that used trusts to place their assets in when they passed away (date of death being 2010). Since an Estate return is not being done, and a trust return is, do the assets get the stepped up value to $1.3 million?

Example: Person establishes a trust in 2000 for his assets when he passes away. Person dies in 2010. Does the Trust return get the same treatment an Estate tax return would get for 2010? ( I know no estate tax return would be needed, but form 8939 would be needed for Estates)

Trust received 1099 R with a taxable amount of $9,000. Is that taxable to the beneficiaries?

[appelman]

It doesn't matter...

whether or not there's a trust. The same step-up rules apply. And don't forget the option to use either 2010 rules or 2011 rules.

Assuming this is an irrevocable trust, the 1099-R is reported as income by the trust. Depending on the terms of the trust document, it may or may not distribute this as taxable income to the beneficiaries.

[Davc]

It may matter.

The OP doesn't specify the type of trust. The basis of the assets after death may be that of the decedent.