If the trusts own the property and the property was never sold by the trusts, the trusts did not realized any capital gains or losses from the property that need to be passed through to the beneficiaries of the trust. If the trust distributed the property to the beneficiaries, the distribution would not be taxable income to the beneficiary and would not be included on the Schedule K-1. I'm not particularly familiar with such transactions, but I believe that the trust's cost basis in the property generally transfers to the beneficiary along with the property. This cost basis would be used to determine the capital gain or loss reportable by the individual when the property is sold by the individual.
Given the complexities of trusts, it might be best to have this gone over by a local tax professional. This is getting way off of the topic of the original question here.
