"No tax implications" sounds inaccurate. If the settlors are still alive and the trusts are grantor trusts, then the sale items will be reported on the settlors' tax return(s), perhaps with the Section 121 exclusion available if the trusts were drafted to allow the settlors to continue occupying the premises rent-free.
If the trusts are non-grantor trusts, the sale is taxed on the trust's Form 1041, with consequences tabulated accordingly.
This situation requires a conversation with the attorney and a deeper look at the facts and circumstances before any tax filing gets made.
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Matthew E. Rappaport, Esq., LL.M.
Vice Managing Partner
Chair, Taxation Group
Falcon, Rappaport & Berkman PLLC
(516) 558-3377
mer@frblaw.com------------------------------
Original Message:
Sent: 03-16-2019 02:12
From: Neil Fishman
Subject: Sale of Residence by Irrevocable Trust
If the house is in a Trust, that doesn't sound right to me. If it is now an asset of the Trust, then shouldn't it be subject to capital gains? Was the residence appraised at the time title was transferred?
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Neil Fishman CPA
FISHMAN ASSOCIATES CPAs PA
Boynton Beach FL
Original Message:
Sent: 03-15-2019 16:41
From: Naoum Tsaousis
Subject: Sale of Residence by Irrevocable Trust
Client placed their residence in 2 irrevocable trusts with their children as the beneficiaries.
The trust sold the residence in 2018 and the proceeds of the sale went into the trust in anticipation of purchasing anther home. The attorney, who set up the trusts , has told my clients there is no tax implication to the sale. Does this sound correct?
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Naoum Tsaousis
NAOUM P. TSAOUSIS, CPA
Holly Springs NC
919-552-7735
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