1041 Realestate Sale

[CAPCPA]

Recent death in family, created trust with rental properties.  Completed a certified appraisal for step up,  but now selling properties at much lower value.  Is that a tax loss on 1041 and passed through to the beneficiaries?    

[sjrcpa]

Are the sales arm's length?

Is there a reasonable explanation for the sales price being less than date of death appraised FMV?

[CAPCPA]

Yes - completely 3rd party sales,  I believe higher interest rates and the fact these were rentals (not in pristine condition) has lowered their true market value.   Trust does not desire to invest in the properties, to upgrade or remodel dated areas. 

[sjrcpa · Accepted solution]

Then yes the sale produces 1231 losses on the 1041. These losses will only pass through to the beneficiaries if it is a final 1041.