When does the holding period of property transferred from an irrevocable trust to the sole beneficiary start? Is it when the trust acquired the property?

[carolgillesp]

My son was the sole beneficiary of an irrevocable trust settled by his grandmother, and I was the trustee.  Pursuant to the trust document, I transferred a condominium and all other assets held by the trust to my son when he turned 30 and put the title to the condominium in his name.  He has occupied the condominium since June 2016 and may want to sell it.  Did the 5-year holding period for Section 121 start when the trust acquired the property or when it was put into his name? 

[tagteam · Accepted solution]

" Did the 5-year holding period for Section 121 start when the trust acquired the property....?"

Pursuant to Reg. §1.121-1(c)(3)(i), the only way the holding period would have began when the trust acquired the property would be if the trust were a grantor trust and that does not appear to be the case here.

Consequently, the holding period would start when the property was transferred out of the trust to him, individually.