Yes, it is a grantor trust. I am both the trustee and beneficiary of the trust. I am the only beneficiary so my parents are not the beneficiaries.
I understood that a gift tax return is needed if it's over $17,00 (2023), but what confuses me is the basis to report on the gift tax return and the trust return.
You mentioned that "The gift would be based on the fair market value of the property on the date of the gift. The trust's basis would be a carryover basis (essentially, your parents' adjusted basis). "
For example, if the rental property was $1M when my parents bought it, and at the time it was transferred to the trust, the FMV was $1.5M.
Does it mean that my parents should report $1.5M on gift tax return AND $1M basis on the trust return?
Thank you for answering my question!
