Sale of an inherited home in a trust

Forum|Forum|7 years ago
January 17, 2019
2 replies
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I am working on the sale of a home section of the 1041 form and it does not allow me to complete the section because it uses the date the Trust was initiated in 1993 as the tax year instead of the year the inherited home was sold (2018).

The Trust was created in 1993, my mother past away in 2017, and the Trust was settled and the home was sold in 2018.

Any guidance would be greatly appreciated.

Thank you

Carl11_2

Employee

Your post is confusing. As I understand it, the trust was created in 1993 and the home was put in the trust at that time. So if the trust sold the home, what is it exactly that was inherited? The trust didn't inherit it, since it was put in the trust well before your mother passed.

If the property was inherited from the trust by someone after your mom passed then the trust didn't sell it.

SmithTrustAuthor

Employee

This is a first for me and I am a bit confused. My understanding is that as the Trustee I have to complete a tax return for the Trust. Myself and my brother inherited the home and I, as the trustee, sold the home to settle the distribution requirements.

Ultimately I need to figure out where to report the assets of the trust (the home and a very small bank account were the only assets), and how they were distributed to the IRS.

Carl11_2

Employee

This is a first for me and I am a bit confused

Then you need to STOP! IMMEDIATELY! Your confusion is going to be VERY VERY EXPENSIVE!

Now understand I'm not being insultive here in any way. My intent is to help, not to judge. But it's quite apparent to me that you have no idea what you're doing, and probably don't even realize what you have done that very well may not only be wrong, but could possibly not even be legal if you didn't do it right. Heck, even I can figure it out based on the information provided, because you don't even know what information you yourself need, much less what you may need to provide here in order get a "useful" response.

sold the home to settle the distribution requirements.

Selling the house does not even come anywhere close to satisfying any distribution requirements. But it does create a potential tax liability for the sale, depending on whose name was on the deed prior to the closing on the sale.

You need to stop and seek professional help immediately. Doing things wrong as the legally recognized/appointed administrator will cost "YOU PERSONALLY" in the form of fines, late fees, interest on past due tax liabilities and more. All of that adds up fast, and adds up to a very high dollar amount that makes the cost of professional help seem like a pittance in comparison. As the administrator of the estate, mistakes are not paid for by the estate. They are paid by "YOU" out of "YOUR" pocket. So I am urging you for the sake of your own finances, as well as those you may (or may not) inherit from the estate, SEEK PROFESSIONAL HELP IMMEDIATELY!

I don't know what you deadline is for filing the estate return in your case, since the living trust was basically "frozen" as a living trust upon the passing of the person who owned it, but the late filing penalties are STEEP and come out of 'YOUR" pocket. So get professional help and get on this right now.

If you get professional help, then it is perfectly possible for the trust to pay for that help. But if you do this on your own and screw it up, the trust does NOT pay for that. *YOU* pay for it.

geobrick

Employee

SmithTrust, I think you're just using language that could be confusing to experts. I think I understand what you're asking but I'm also likely to use the wrong terms for things (and yes, using the wrong terms can lead to bad advice because of the confusion).

Selling a home where the deed is in the name of the Trust should be a common situation.

When the Grantor of the Revocable Living Trust dies, the Trust becomes irrevocable and gets a new EIN number. All the assets are then used to cover estate expenses and eventually distributed to the beneficiaries in accordance with the Trust's instructions. If the house is deeded in the Name of the Trust and needs to be sold to accommodate the estate distribution to the beneficiaries, the Trustee will sell the house. The net proceeds are then distributed to the beneficiaries in accordance with the trust.

The gain would be the net amount of the sale less the value of the house on the date of death (finding the estimated value on that day may be difficult).

My question is where in TurboTax business would we enter the sale of a home? There doesn't seem to be a section for this.