I live in California and am using TurboTax Business 2023 to file a first and final fiduciary tax return (Form 1041) after the death of my mother (last parent). She owned a house in a revocable trust. I sold the house 4.5 months after she died. It is my understanding that the house gets a step-up in cost basis at her date of death. My trust attorney told me that if the house was sold within 6 months, I can use the sale price as the cost basis and no appraisal would be necessary. I have the following questions:
1) Since the house was sold 4.5 months after the date of death, the sale price would be the same as the cost basis resulting in no capital gain. Since there is approximately $100,000 in deductible selling expenses, does this mean there would be a loss of $100,000 and that this loss would be passed on to the beneficiaries in their K-1's since this is the final fiduciary tax return?
2) At my mother's date of death, the county re-valued the house for property tax purposes. We received a new property tax bill based on the higher value of the house for the time period from the date of death to the closing date of the sale. Is this property tax amount deductible on Form 1041 as local taxes?
Thank you in advance for anyone answering the above two complicated questions.
