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What kind of tax is paid on property sold from a trust that was inherited?
My husband's grandmother placed land in a trust in the names of all of the grandkids many years ago, as an inheritance. In order to sell the land, the trust stipulated all of the grandkids have to have agreed to sell, and they recently have. When the land is sold and the profits are split among the grandkids, what kind of tax do we pay on my husband's share? Is this looked at like an inheritance, or like income (capital gains)?
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Deductions & credits
Good news is all inherited property is Long Term Capital gain regardless of how long held.
Each heir will show their portion of the sale and sales date, with the cost being thier share of the land at Fair Market Value on date of death, plus improvments made since owned.
So for example say there were 5 children, and land sold for $550K and had $25K selling expenses.
Sale price for each one would be $110K
selling expenses $5K
less share of FMV
equals profit.
To enter your Investments sold
Click on Federal Taxes
Click on Wages and Income
Click on I'll choose what I work on
Scroll down to Investments
On Stocks, Bonds, Other, click the start or update button
The long-term capital gain rate is much more favorable and depends on other income on the return to determine that rate.
https://www.fool.com/retirement/2016/12/11/long-term-capital-gains-tax-rates-in-2017.aspx