Thanks so very much for answering. If my follow up questions seem like I'm rather illiterate on this subject, it's only because I am. I apologize for that. I've read a lot on the subject & looked up the term "stepped up basis." I think I understand the general concept, but I am such a detail person I guess I need to take some baby steps. I read somewhere that tax matters for trusts are one of the most complicated things the IRS throws at us. I'd like to state or restate some facts to see if they affect the details of how "stepped up" applies in this case. I don't know if the stock is an inheritance, estate, or something else.
Based on life insurance policies &/or annuities my parents bought, stock was given to my parents during corporate changes & spinoffs at $0 basis in 1999 and 2017. They established the irrevocable trust in 2011 with me as sole trustee. All current and future property, real, financial, & personal, was designated as gifted into the trust. Their house and all investments (except the stock) were officially transferred. The trust stated that anything not transferred should be considered as though it had been transferred. The beneficiaries were to be me @ 50% and each of my 2 children @ 25%. Those distributions have been made and the trust is depleted.
Assuming I understand the "stepped up" rule, tax liability for the trust on stock gains does not go back to the date my parents acquired the stock. After that, I see 3 possible dates for the start of the trust's tax liability: the date the trust was formed, the dates my parents died (2015 & 2019), or the dates the ownership of the stock actually transferred to the trust. We thought that trust ownership of everything effectively eliminated any estate. In principle & intent, the trust already owned the stock when my parents died. Maybe the failure to actually complete the transfer complicates this. Also, some of these facts may change everything or they may be moot depending how tax reg's define things. I just don't know.
I really want to do the right thing here. If I need to consult a tax attorney, someone please just say so. If someone who understands this is patient enough to guide me through this, I'll be in your debt. (How about free professional advice on how to hang almost anything on the wall?)
THANKS!!!
