There was some confusion in my first post, so I am reposting this with clearer details. This home was sold in Dec 2023 and I am trying to figure out how to calculate the gain or loss to report the sale to the IRS and/or CA. I have no idea what to do, please help!
- The home is located in CA. It was owned by Lucy's Living Revocable Trust, which listed her and her son as co-trustees.
- Lucy passed away in June 2014 and the deed remained in the name of Lucy's Trust, which of course became irrevocable at this time due to her death. Zillow estimates FMV at this time as $325,000.
- Lucy's Trust granted special permission to her son to access the trust's money and live in the trust's house until he passed away (which he did in Oct 2023), at which point all assets were to be liquidated and given to Lucy's Trust's beneficiaries.
- We received a (sight unseen) free CMA report three weeks after the son's death and a month before it was sold in 2023, with a value of ~$365,000, based on neighborhood price per sqft.
- We received another email (sight seen through photos) from a realtor who said the comparative market rate would be about ~$369,000 (again based on sqft) but that its value to an investor would likely be $250,000,. His "friend" made an offer of $230k and provided a list of repairs and remodeling he would do, while another investor offered $320k and we accepted their offer. Would the FMV be $250k investor estimate? $320k sales price? $365k or $369k comparitive price? Or do I use the "step-up basis" from 2014 that I found on Zillow for $325k? As you can see, there's a huge gap between the highest and lowest numbers; one would be a capital gain of $70k, one would be a capital loss of $49k.
- No appraisal was paid for and now it is too late to get one because it is already being remodeled.
- House was sold in Dec 2023 for $320,000 due to extensive necessary repairs. 1099-S lists Lucy's Trust and EIN.
- Not sure if I'm to use the step-up basis from 2014, the CMA from 2023, an investor's estimate, or the actual sales price ("what it would sell for on the market").
- Not sure HOW or WHAT to report to IRS, I just know the sale will be reported under Lucy's Trust.
- (Reporting a gain or loss doesn't affect me in any way since I will be receiving no share of the trust funds. If I could say "it was worth 320k and sold for 320k" and claim nothing, that would make my life easier, but I'm guessing that's not possible.)
- Trust lawyer tells me to consult CPA. CPA tells me to consult trust lawyer. I'm going in circles. Local CPAs charge $1500 for assistance. If you can recommend a more affordable Trust CPA who can help me file in CA, please do!! 🙏
Any knowledge you could share would be extremely helpful. Thank you so much for your time!
