I am successor trustee of a irrevocable trust. The. trust was created in 2006. In this trust is land that is owned by the trust. There is a gas station on this land that we have a ground lease to the tenant of the gas station and he pays the trust rentevery month. The trust only owns the land not the gas station.
Land was valued at $665,000 in 2006. We want to sell the land and close out the trust. Are we able to add the sales commission and any or all of the closing costs to the cost basis?generates an income the gain of the sale would be ordinary income.
Land is worth $2,000,000 now. When we sell how is the gain taxed? Looking at the 1041 would it be Business Income? Capital Gains? Or ordinary income for the trust? I thought it would be capital gains but talking to one accountant he said since the land
There are two beneficiaries that receive the rent from the trust every month. Am I able to distribute the gain using a K-1 to each beneficiary? I am assuming it is better for the gain to be taxed to the beneficiaries.
Also in the trust it states the land can not be sold until one of the beneficiaries is dead. That person wants to sell the land now before she dies. Is there a work around to selling the land before she dies?
On 7/31/2021 9:06 AM, whiskers wrote:rent every month. The trust only owns the land not the gas station.
I am successor trustee of a irrevocable trust. The. trust was created in 2006. In this trust is land that is owned by the trust. There is a gas station on this land that we have a ground lease to the tenant of the gas station and he pays the trust
land generates an income the gain of the sale would be ordinary income.Land was valued at $665,000 in 2006. We want to sell the land and close out the trust. Are we able to add the sales commission and any or all of the closing costs to the cost basis?
Land is worth $2,000,000 now. When we sell how is the gain taxed? Looking at the 1041 would it be Business Income? Capital Gains? Or ordinary income for the trust? I thought it would be capital gains but talking to one accountant he said since the
The trust states after the one beneficiary dies the land is to be sold and the proceeds go to me. Then the trust is to terminated.There are two beneficiaries that receive the rent from the trust every month. Am I able to distribute the gain using a K-1 to each beneficiary? I am assuming it is better for the gain to be taxed to the beneficiaries.
Also in the trust it states the land can not be sold until one of the beneficiaries is dead. That person wants to sell the land now before she dies. Is there a work around to selling the land before she dies?
What does the trust say about distribution of trust assets after that
one of the beneficiaries has died?
On Sunday, August 1, 2021 at 9:47:06 AM UTC-6, Taxed and Spent wrote:rent every month. The trust only owns the land not the gas station.
On 7/31/2021 9:06 AM, whiskers wrote:
I am successor trustee of a irrevocable trust. The. trust was created in 2006. In this trust is land that is owned by the trust. There is a gas station on this land that we have a ground lease to the tenant of the gas station and he pays the trust
land generates an income the gain of the sale would be ordinary income.
Land was valued at $665,000 in 2006. We want to sell the land and close out the trust. Are we able to add the sales commission and any or all of the closing costs to the cost basis?
Land is worth $2,000,000 now. When we sell how is the gain taxed? Looking at the 1041 would it be Business Income? Capital Gains? Or ordinary income for the trust? I thought it would be capital gains but talking to one accountant he said since the
The trust states after the one beneficiary dies the land is to be sold and the proceeds go to me. Then the trust is to terminated.There are two beneficiaries that receive the rent from the trust every month. Am I able to distribute the gain using a K-1 to each beneficiary? I am assuming it is better for the gain to be taxed to the beneficiaries.What does the trust say about distribution of trust assets after that
Also in the trust it states the land can not be sold until one of the beneficiaries is dead. That person wants to sell the land now before she dies. Is there a work around to selling the land before she dies?
one of the beneficiaries has died?
On 8/2/2021 12:54 PM, whiskers wrote:rent every month. The trust only owns the land not the gas station.
On Sunday, August 1, 2021 at 9:47:06 AM UTC-6, Taxed and Spent wrote:
On 7/31/2021 9:06 AM, whiskers wrote:
I am successor trustee of a irrevocable trust. The. trust was created in 2006. In this trust is land that is owned by the trust. There is a gas station on this land that we have a ground lease to the tenant of the gas station and he pays the trust
land generates an income the gain of the sale would be ordinary income.
Land was valued at $665,000 in 2006. We want to sell the land and close out the trust. Are we able to add the sales commission and any or all of the closing costs to the cost basis?
Land is worth $2,000,000 now. When we sell how is the gain taxed? Looking at the 1041 would it be Business Income? Capital Gains? Or ordinary income for the trust? I thought it would be capital gains but talking to one accountant he said since the
My sister gets 56% of the monthly income and I get 44%. When my sister dies I am suppose to sell the land and keep the proceeds and close the trust. My sister says she will have enough money with the sale of the land so she will not miss her lost income.The trust states after the one beneficiary dies the land is to be sold and the proceeds go to me. Then the trust is to terminated.There are two beneficiaries that receive the rent from the trust every month. Am I able to distribute the gain using a K-1 to each beneficiary? I am assuming it is better for the gain to be taxed to the beneficiaries.What does the trust say about distribution of trust assets after that
Also in the trust it states the land can not be sold until one of the beneficiaries is dead. That person wants to sell the land now before she dies. Is there a work around to selling the land before she dies?
one of the beneficiaries has died?
This is a bit confusing.
Are you "the second beneficiary" who receives half of the rent each
month? If not, who is that second beneficiary? What do you intend to
happen to her lost income after the property is sold?
Is your new intent that the "first beneficiary" is to receive half of
the sales proceeds? She is not entitled to them. Is she willing to
forgo income from the date of the property sale until her death? If
not, what is your thinking here?
What is the main reason you want to sell the property and wind up the
trust now?
It seems that in order to change the trust in some fashion you will have
to petition the Probate Court and give good reasons, and acceptance of
the proposed change by all interested parties, i.e. present and future beneficiaries. And the closer the change is to the initial intent of the trust, the better. Others who frequent here are likely to have more experience in these matters, I am mostly just trying to get the details
out in the open.
My sister gets 56% of the monthly income and I get 44%. When my
sister dies I am suppose to sell the land and keep the proceeds
and close the trust. My sister says she will have enough money
with the sale of the land so she will not miss her lost income.
My intent is she will get 56% of the proceeds of the sale and I
will get 44% even though I know she is not entitled to it I will
do it anyway. She is okay with forgoing the income from the date
of sale until her death.
My sister wants to buy a house. She is renting right now and does
not like it.
My thinking was that if no one contests the trust there would be
no problem in selling the land now since it is my sister who wants
to do it.
whiskers <whisk...@hotmail.com> wrote:
My sister gets 56% of the monthly income and I get 44%. When my
sister dies I am suppose to sell the land and keep the proceeds
and close the trust. My sister says she will have enough money
with the sale of the land so she will not miss her lost income.
My intent is she will get 56% of the proceeds of the sale and I
will get 44% even though I know she is not entitled to it I will
do it anyway. She is okay with forgoing the income from the date
of sale until her death.
My sister wants to buy a house. She is renting right now and does
not like it.
My thinking was that if no one contests the trust there would beIf that is what you both agree to, the law will probably allow that.
no problem in selling the land now since it is my sister who wants
to do it.
It's called Partition. Technically your sister's share would be less
than 56% because it would be calculated based on the actuarial value
of her current income stream. But if that split is OK with you, the
law is unlikely to prevent it.
--Thank you for everyone's replies so far. What about the question of capital gains or ordinary income? Can I take the gain as capital gains and deduct the cost basis on the trust tax return. Then distribute the gain 56% to my sister and 44% to me on the
Stu
http://DownToEarthLawyer.com
Thank you for everyone's replies so far. What about the question
of capital gains or ordinary income? Can I take the gain as
capital gains and deduct the cost basis on the trust tax return.
Then distribute the gain 56% to my sister and 44% to me on the two
k-1's? That way both of us will pay the tax on our own 1040 and
state returns. One accountant told me the profit must be ordinary
income and not capital gain because the land generates monthly
income. We would both like to pay the 20% capital gain rate and
not the 37% rate ordinary income rate.
whiskers <whisk...@hotmail.com> wroteI never took depreciation. We only own the land not the gas station that sits on it. I like your answer better. Good to know the gain will be capital gains. Thank You.
Thank you for everyone's replies so far. What about the questionI think the accountant is wrong. The property was an investment, not inventory. People have apartment buildings that generate income, but
of capital gains or ordinary income? Can I take the gain as
capital gains and deduct the cost basis on the trust tax return.
Then distribute the gain 56% to my sister and 44% to me on the two
k-1's? That way both of us will pay the tax on our own 1040 and
state returns. One accountant told me the profit must be ordinary
income and not capital gain because the land generates monthly
income. We would both like to pay the 20% capital gain rate and
not the 37% rate ordinary income rate.
when they are sold the profit is capital gain.
Now you will have to recapture depreciation, and that will be taxed as ordinary income.
--
Stu
http://DownToEarthLawyer.com
I think the accountant is wrong. The property was an investment, not >inventory. People have apartment buildings that generate income, but
when they are sold the profit is capital gain.
Now you will have to recapture depreciation, and that will be taxed as >ordinary income.
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