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Subject:  Re: Trust Taxes Date:  10/22/2006  6:42 PM
Author:  ibnana Number:  89193 of 131100

Each heir's distribution will probably in shares of the equities,thus getting a stepped-up basis for each stock.

The cost basis date for the shares will be the date of her father's death, not her mother's recent death.

My question is will the trust have to pay capital gains tax on all stocks appreciation once the distribution to the heirs occurs?

The stocks will be distributed to the heirs according to the terms of the trust. EG: If there are five heirs and there are 100 SH, each will get 20 SH if the terms of the trust say it is to be divided equally. If/when she sells her 20 SH she will pay the capital gains with the cost basis being as of the date of your father's death. The trust should supply her with the correct cost basis.

I inherited shares of stock from my dad's trust. He died in 1986 and my mom had the income from it until she died in 1996 when the shares were distributed to my brother and me. That was how it was handled. I still have some of the stock, but what I have sold I paid capital gains in the year it was sold and based on the 1986 cost basis. I don't think any of the rules have changed since then.


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