If you had a gain on the sale of the house belonging to a trust it would be treated as a taxable capital gain. However, the gain would be determined by subtracting the cost basis of the house from the net sale proceeds. The cost basis would be the fair market value of the house when the trust was created plus improvements made to it after that time. So, you may need to adjust your cost basis to reduce or eliminate the capital gain that is being reported.
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