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  • 1.  SALE OF PRIMARY RESIDENCE IN IRREVOCABLE TRUST AND SECTION 121

    Silver Most Valuable Member
    Posted 01-12-2022 12:32 PM
    i have a client that sold a primary residence in an irrevocable trust. Here are the facts. The trust had a life estate paragraph in the body of trust document. The grantors who still lived in the residence until the sale are both still living. The closing documents list the trust as the seller.

    The questions is two fold. Can they use the 121 exclusion on the Life estate portion of the sale proceeds. If so how do we show the sale. Is the whole transaction reported on the trust return and the 121 exclusion used as part of the cost basis?

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    Gabriel Bentovim
    HOFFMAN & BENTOVIM, CPAs PC
    Commack NY
    631-499-1500
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  • 2.  RE: SALE OF PRIMARY RESIDENCE IN IRREVOCABLE TRUST AND SECTION 121

    Silver Most Valuable Member
    Posted 01-13-2022 10:04 AM

    Look at Treas. Reg. 1.121-1(c)(3).  Then you must carefully look at the trust to determine if the grantor trust provisions will apply to the residence.  It appears so based on your summary but I can't express any definite conclusions without reviewing the facts and documents.

     

    Very truly yours,

     

    ROBERT S. BARNETT

     

     

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