Selling parent’s home in California. Proceeds went from trust set up in parent’s name to trust set up in my name. I did not receive any profits from this. What are capital gains and tax implications

[TaxandtheCurious]

It is a bit unclear as to when the home was sold. So, assuming that the home was held in your parent's trust and sold after their death, you could be entitled to what is called "step-up in basis". The step-up in basis provision adjusts the value, or “cost basis,” of an inherited asset (stocks, bonds, real estate, etc.) when it is passed on, after death. This often reduces the capital gains tax owed by the recipient. The cost basis of the property receives a “step-up” to its fair market value at the time of death.  This eliminates the capital gain that occurred between the original purchase of the asset and the heir’s acquisition, reducing the heir’s tax liability, as the gain is now calculated based on step-up basis at time of death and sale price. Any capital gains tax would be assessed regardless of whether the proceeds were issued to you, or transferred to your trust. 

[Sbarbaro]

Sorry for not being totally clear.  Yes, the house was sold in April 2022 in Northern California after my mom’s passing in October 2021.  Father has passed also.  The house was in the name of their trust.  When it sold, the proceeds went into a trust that was set up in my and my brother’s names.  From there, my half of the proceeds went into two individual trust accounts for each of my boys.  I personally did not benefit financially from my half of the sale of the house.  The house sold for around $25,000 above the appraised value.   Will I receive a tax form from the government showing the sale of the house and any capital gains that my brother and I owe? Never done this before so we don’t know.  Will the house selling for above the appraised value be considered in the capital gains area?

[TaxandtheCurious]

Thank you for clarifying. You are responsible for the capital gains on the portion of proceeds that you proportionally received into the trust that was set up for your brother and you.  Receiving the proceeds into the newly established trust does not exempt you from capital gains tax. Furthermore, the fact that you chose to gift these funds to your children, does not exempt you from any tax either. You may very likely receive a form 1099-S from escrow. Whether or not you receive the form, you are still required to report the the transaction and your portion of the gain.