Does your answer apply when the assets are transferred out of an IRA in a living trust to a beneficiary/heir (me)?
My mom passed away in 2020. This particular portfolio was part of her trust ( whether Traditional IRA or ROTH I am still trying to determine.) I am in this trust with 2 other brothers. I transferred my portion of this particular portion of mutual fund shares out of the trust to my individual account in 2022, and then liquidated them in 2024.
Were my mom still alive, I don't expect she would have to pay taxes on the full value of the asset if she cashed out - she would have only paid taxes on the net gain in value.
So why should I expect to pay taxes an the whole value of liquidated shares, as if the starting basis was $0? At a minimum, why would not at least $18K be considered a tax free gift and I only pay a tax on the difference between the sales price and $18K? Or as I said, the difference between the step up value and the sales price.
In 2024, the annual gift tax exclusion allows individuals to give up to $18,000 per recipient without incurring gift tax, while the lifetime gift and estate tax exemption is set at $12.92 million.
I think we might be talking apples and oranges here ( I could have been clearer in my problem description). This is not a typical "distribution" from a retirement plan in the traditional sense. I cashed out an asset held in my deceased mothers trust.
