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frank527
Returning Member

1041 Trust - Sale of Home Not held for income

Hopefully not too lame a question.

Settlor died and the Trust owned the house before death. 1041 filing and Trust pays taxes. Probable no pass-through K-1 option. Basis is stepped up at DOD. 9 years after death, house sold but wasn't rented out during those 9 years. Large gain from sale. Is the income/gain taxed at the capital gains tax of 20% or at the regular tax for income, i.e. $3,500 plus 37% over $14,450 because it wasn't held to produce income? Thanks

 

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1 Reply
M-MTax
Level 10

1041 Trust - Sale of Home Not held for income

 Is the income/gain taxed at the capital gains tax of 20%

Yes, capped at 20%. The compressed trust tax rates just get you to the 20% cap sooner.

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