- I understand I will have to report the house sale as a gain or loss. How do I calculate the gain or loss?
the son was a remainderman under his parent's trust agreement. when the parent died the son became the owner so the basis to use is the FMV on the date of death of the son. I can see no reason to need a 2014 valuation.
Do I use the step-up basis from the trust owner / home owner's death in 2014, or the CMA from when the son passed away and the house was sold?
do you request or pay for the CMA? it may be worthless because the valuation should have been what the property could sell for. I can go on many websites and get valuations for property but sight unseen they're worthless when it comes to taxes. To protect yourself since using the CMA would result in over a $100K loss if you didn't pay for it, you should get a certified appraisal from a qualified expert. Your the one signing the return
- Do I need to report the son's withdrawals from the parent's trust bank account on his taxes as a form of income? Or are these considered a tax-free inheritance?
this question can't be answered because we don't know what the trust provided for in the way of distribution of income. The son may have only been withdrawing corpus (not taxable) . You may need to see a lawyer to analyze the tryst provisions. The question is what type of returns, if any, were filed for the trust from 2014 through 2023. this process would continue through the son's death. then what happens and tax reporting depended on the trust provisions dealing with the death of the son.
