My father passed away last year. He had a grantor trust that converted to an irrevocable trust upon his death. As his executor, I am both the successor trustee for this trust and the fiduciary responsible for filing his final individual return, with split-tax reporting for the year.
One complication that required me to seek an extension was a forced sale of some MLP units he owned that occurred shortly after his passing, but before the units could be transferred to a trust brokerage account. (The partnership just bought out the units out of the blue). He had owned these units for almost 40 years, and received a final K-1 for them under his own name and SSN that reflected his (considerably negative) individual adjusted basis.
My understanding is that because this K-1 was issued under his name, it will have to be reported on his individual return. However, legally, these units became property of the trust upon his death, so I would think they should be entitled to a step-up in basis as inherited assets. Moreover, the proceeds have since been moved into an account under the trust’s EIN. Therefore, will it be possible to just go ahead and take the step-up in basis that the trust should be entitled to, even though the K-1 as issued doesn’t reflect that? If not, should I request a new K-1 be issued in the name of the trust? I don't know how long that will take, or if they'll even do it.
Using Turbotax Premier for the individual return and Turbotax Business for the trust return.
Thanks.
