Revocable Trust Sells CA Real Property

[momona]

I think I am overthinking this question, hence the post.

Husband and wife buy CA vacant land. Husband dies and FMV at time of death is higher than cost. Wife dies and FMV is the highest yet.

Two years after her death, the trust sells the property under its EIN. Per the will, the trust is responsible for taxes and the remaining funds will be disbursed to the heirs.

I want to confirm that the basis is the FMV at the time of death of the wife and that it doesn't matter that it was sold under the trust's EIN versus the heirs' SSN. Also, I'm not familiar with community property state rules so I just want to make sure that I am using the correct FMV.

[Burke]

It may have been a revocable trust while the original and/or surviving owners were alive. However, at the death of the 2nd spouse the trust became irrevocable, and the land (if titled in the trust's name, which it must have been for it to sell it) would have received full stepped-up basis at that time. The sale could not have been reported under the deceased's SSN two years after she had died. If the property had been distributed to other heirs prior to the sale, which it doesn't sound like that happened, then the sale would be reportable under their SSN's.

[appelman]

A lot depends on the terms of the original trust. Often an irrevocable trust will be created after the death of the FIRST spouse and will contain half the total trust assets; the other half will remain in the revocable trust.