Trusts and Foreclosures

Forum|Forum|1 year ago
February 12, 2025
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A main home that was lived in by grantor, the grantor's daughter (successor trustee/guardian of great-grandchild), and the great grandchild who is 8 (the only beneficiary) was put into a revocable trust. The grantor passes away and the house goes into foreclosure. The trust closes and the Surplus from the proceeds go to the trustee. No 1099-S was given but a 1099-A (with no mention of proceeds) issued to the estate was. What tax forms do i need to file?

AmyC

Employee

You may need to file:

Form 1041 for the estate.
Foreclosure yields 1099-A which shows the outstanding debt and fair market value. The house has a stepped up basis to the FMV on the date of the grantor's death. You could have a loss.
Sch D - report a gain or loss on the foreclosure
Sch 706 may be required for generation skipping

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