I received my interest in a commercial real estate LLC through inheritance in 1990. Per my father's estate tax return, the FMV was the LLC interest was $104,000. The LLC interest was put into a bypass trust for my mother, who received a stepped up basis in the LLC and all income from the LLC until her death in 1999. I do not have a stepped up basis because the LLC was in a bypass trust and was not part of my mother's estate. My first K1 for the LLC used my mother's ending capital account balance as my beginning capital account balance. That amount was about $50,000 less than my own outside basis. My question is can I use my own outside basis ($104,000) as a starting point for making my initial outside basis adjustment (for year 1999) or is my outside basis reduced by income distributions made to my mother during the time the LLC was in the bypass trust?
