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stepped up basis and estate return

stevedip1
Level 1

Parent passed in May 2020, had fully depreciated rental prop and IRA in Revocable trust , prop and IRA was transferred to heir in Jan 2021, is a trust return needed  for period of death to Dec 2020? If so would stepped up basis be applied in trust return and then new basis be passed to heir or when it is given to heir in 2021?

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IRonMaN
Level 15

If the trust received income for that period, yes a return would be necessary.  And yes, the property would have a stepped up basis.  As a side note, did the trust have a calendar year end or does it have a fiscal year end so you would have to only prepare a one and done return?

ACME Taxes, Tattoos, Tires and Tasmanian Devils - one free devil with every return.

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IRonMaN
Level 15

If the trust received income for that period, yes a return would be necessary.  And yes, the property would have a stepped up basis.  As a side note, did the trust have a calendar year end or does it have a fiscal year end so you would have to only prepare a one and done return?

ACME Taxes, Tattoos, Tires and Tasmanian Devils - one free devil with every return.

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Accountant-Man
Level 11

Trusts are required to end 12/31.

** I'm still a champion... of the world! Even without The Lounge.
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IRonMaN
Level 15

I thought there was an election available to go with a fiscal year.

ACME Taxes, Tattoos, Tires and Tasmanian Devils - one free devil with every return.
BobKamman
Level 15

Trusts that are related to estates can elect a fiscal year, even if there are no probate assets.  See Section 645.  But the election must be made by the due date of the first return, which here would be August 15, for an April 30 ending date.  

But exactly what happened to that IRA? If the trust was named beneficiary, did it collect all the cash, then distribute it to the heir?  Or did it figure out how to get around that and roll it over as an inherited IRA?

I'm asking this for Bob, so he that could finish his final two returns.:

If the IRA invested in the production of a movie, did it win an Oscar?

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Accountant-Man
Level 11

FYI, IRAs don't get stepped up. 

** I'm still a champion... of the world! Even without The Lounge.
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