@Jim t1 wrote:
My sister and I are both trusties and beneficiaries.
But you and your sister are not the grantors, your father and mother are the grantors (at least that is the way in which it appears from your answers).
In that event, the house would not qualify for the home sale exclusion under Section 121 and the trust (or beneficiaries if the gain is passed through and distributed) would be responsible for any taxes due on the capital gain.
Note that the assumption here is that the house was used for personal purposes, not rental use. If the latter, then there would be recapture of depreciation involved.
