Stepped up basis for trust - filing requirements Forms 706, 8971

Forum|Forum|11 months ago
April 13, 2025
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My deceased fathers property was in a trust and was sold within 6 months of his death to an unrelated party. I did not establish probate, and the value of the estate is below the exclusion.

Is 26 U.S. Code § 2032 - Alternate valuation enough for me to establish the property's basis on the trusts 1041 at the selling price, or do I also need to file form 706 and 8971 to obtain the stepped up basis?

Thanks in advance!

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Best answer by M-MTax

If neither apply, how do I establish the basis of the inherited property that was in a grantor revocable trust that converted to an irrevocable trust?

@Celilo wrote:
If neither apply, how do I establish the basis of the inherited property that was in a grantor revocable trust that converted to an irrevocable trust?

By a date of death appraisal done by a licensed real estate appraiser.

M-MTax

@Celilo wrote:
Is 26 U.S. Code § 2032 - Alternate valuation enough for me to establish the property's basis.............?

No.

In order to elect the alternate valuation date (6 months after death), that valuation must BOTH decrease the value of the gross estate AND decrease the amount of estate tax due, per Section 2032(c).

See https://www.law.cornell.edu/uscode/text/26/2032

Since the value of the estate is below the exemption and you won't be filing a 706 as result, Section 2032 does not apply.

CeliloAuthor

Thank you M-MTax. I understand that the value of the estate does not require that I file a 706. But, if 2032 does not apply, won't I need to file an 8971 to establish a stepped up basis? And, does that not require that I also file a 706?