Taxpayer Inherited Prop

[S T]

Taxpayer inherited 1/3 of Mother's Residence - went through a Trust - Trustee closed the Trust and had the property re-deeded 1/3 to each beneficiary to close out the Trust ---

Due to declining market values, the individual beneficiaries held onto the property until 2013, and then sold.

Using the FMV and the Sale - will be reported on Schedule D - and can a loss be claimed?

Has been vacant since 2008 - sold in 2013

Thanks

Sandy

[Maribeth]

The basis for your client in the property is the basis in the trust. The property is investment property in your client's hands and so if there is a loss, that loss is deductible and would be a long-term capital loss.

[taxea]

if the deceased was the grantor of the trust then the FMV to the taxpayer would be 1/3 of the FMV on date of death. I don't understand people who don't create an income property in these situations if time permits.

[Burke]

It is unclear from the OP whether the trust was established as a result of the will. Or whether the trust was an RLT to begin with. Both of those types would get stepped-up basis at the decedent's death. If it was a grantor trust established while the home owner was alive, then the property takes the original grantor's basis. You have to determine which type it is. In no case will you use FMV at the time it is disbursed from the trust.

[S T]

Thanks Maribeth for the confirmation on treatment as investment property. I thought so, but have not had one in a few years

Sandy

[S T]

RLT - death - Stepped Up FMV on death - Trust closed and disbursed via grant deeds - so trust could be closed , so using the FMV on death in the "hands of the trust"

Beneficiaries held the property due to decline in the market value before selling, allowing some time for recovery.

Sound correct

Sandy