Trusts and Foreclosures

[ysmades76]

A main home that was lived in by grantor, the grantor's daughter (successor trustee/guardian of great-grandchild), and the great grandchild who is 8 (the only beneficiary) was put into a revocable trust. The grantor passes away and the house goes into foreclosure. The trust closes and the Surplus from the proceeds go to the trustee. No 1099-S was given but a 1099-A (with no mention of proceeds) issued to the estate was. What tax forms do i need to file?

[AmyC]

You may need to file:

• Form 1041 for the estate. 
• Foreclosure yields 1099-A which shows the outstanding debt and fair market value. The house has a stepped up basis to the FMV on the date of the grantor's death. You could have a loss.
• Sch D - report a gain or loss on the foreclosure
• Sch 706 may be required for generation skipping