Revocable trust sale of land - Trust pays capital gain tax? Allocation of gain?

[Adouglas2k1]

I am the trustee of my late mother's revocable trust. We have started selling off land held by the trust. I have received 1099-S statements for the sale of several lots, and am using the assessed value of the land from the year she passed as the cost basis. 

My question has to do with who pays tax on the capital gain... the trust or the beneficiaries? I have been withholding funds from beneficiary distributions of the sale proceeds so that the trust can pay the tax.

There is no place in Turbotax Business to specifically enter information from a 1099-S, so I have entered each sale as a line item in the Investment Income section.

There is also a section asking about the portion of total long-term capital gain that is allocable to the beneficiaries. If the trust pays the tax, it seems that this should be zero. Is that correct?



I have been making distributions to the beneficiaries and withholding funds so that the trust can pay capital gains. 

[M-MTax]

The IRS does not have to accept the assessed value of the land on the date of passing as the basis. It is optimum to secure a date of death appraisal by a licensed real estate appraiser.

If the trust pays the tax on the gains, then the portion allocable to the beneficiaries (and to income) should indeed be zero.

The trust will then pay the tax and distribute cash proceeds as corpus and tax-free to the beneficiaries.

[Mike9241]

in part who pays the tax depends on what the trust instrument says and state law. it may allow the distribution of the capital gain to the beneficiaries. Allowable but not required. if it is distributed, then they pay the tax. 

the trust may  allow the trustee to distribute capital gains to the beneficiaries - then the question usually is which way produces the lowes taxes 

on the other hand, even if the trust agreement is silent on such distributions state law may allow the trustee to use his discretion in deciding whether to distribute the gains. this becomes a legal question.